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HIGH COURT OF GUJARAT
N.V. ANJARIA, BHARGAV D. KARIA, JJ
PRITIBEN KIRANBHAI ARVINDBHAI MODI – Appellant
Versus
STATE OF GUJARAT – Respondent
R/SPECIAL CIVIL APPLICATION NO. 4449 of 2022
For the Appellants/Petitioners: MR RAMKRISHNA B DAVE
For the Respondents: MR KRUTIK PARIKH, AGP
Tax penalties cannot be enforced when software errors lead to incorrect tax assessments; discretion is essential in penalty imposition.
Headnote:(A) Gujarat Motor Vehicles Tax Act, 1958 - Sections 8A and 18 - Recovery of tax difference - The petitioner challenged a demand notice for tax difference, penalties, and interest regarding an Omnibus. The court held that due to an error in the respondents' software, the petitioner was not liable for penalties, allowing for interest to be charged at a reduced rate. (Paras 26-32)
(B) Taxation Authority Discretion - The court noted that the penalty for non-payment is not mandatory and relies on the discretion of the taxation authority. (Paras 27-28)
Facts of the case:
The petitioner, owner of an Omnibus, contested a demand notice for unpaid tax, arguing that payments had been made as assessed, seeking to waive penalties and interest based on software errors. The respondents had deemed the Omnibus ordinary, while the petitioner claimed it was a luxury vehicle.
Findings of Court:
Liability for tax was confirmed, but penalties were quashed due to software error; interest was adjusted.
Issues: Whether the petitioner was liable for penalties and interest due to an error in the payment system.
Ratio Decidendi: The court ruled that due to software-related confusion, the petitioner was not liable for penalties, affirming discretion resides with the taxation authority in such cases.
Result: Petition partly allowed.
| Table of Content |
|---|
| 1. tax liability based on vehicle classification determination. (Para 4 , 10 , 12) |
| 2. discretionary power of tax authorities in penalty assessment. (Para 24 , 26 , 28) |
| 3. court ordered partial relief based on software error. (Para 32 , 34 , 35) |
JUDGEMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1.Heard learned advocate Mr. Ramkrishna B. Dave for the petitioner and learned Assistant Government Pleader Mr. Krutik Parikh for the respondents.
2.Having regard to the controversy involved in this petition which is in a very narrow compass, with the consent of learned advocates for the respective sides, the petition is taken up for final hearing.
3.Rule returnable forthwith. Learned Assistant Government Pleader Mr. Krutik Parikh waives service of notice of rule on behalf of the respondents.
4.The petitioner has challenged the demand notice dated 11.03.2022 issued by respondent no.2 for recovery of difference of tax of Rs.2,96,450/-, penalty of Rs.74,113/- and interest of Rs. 91,563/- totalling to Rs. 4,62,126/- in respect of Motor Vehicle bearing registration no. GJ.01.FT.6768 5.The petitioner is the owner of Omnibus contract carriage bearing registration No.
GJ.01.FT.6768 which is covered with valid permit from 18.09.2017 to 17.09.2022 issued by the Regional Transport Authority, Ahmedabad.
6.Respondent no.2 by letter dated 26.11.2021 informed the petitioner to bring the Omnibus owned by the petitioner in the compound of respondent no.2 for inspection. 7.The petitioner by letter dated 27.11.2021 requested respondent no.2 to give some time to produce the bus and also informed the respondent no.2 that the petitioner had paid the tax at luxury rate from the date the bus was registered upto the procedure adopted by the respondents to pay the tax online at the rate shown in the software of the respondents at the reduced rate from March, 2019.
8.The petitioner orally as well as by letter 7.01.2022 made a representation before the respondents pointing out the error in Vahan- IV website of the respondents showing the Omnibus owned by the petitioner as ordinary bus and collecting the tax at the rate chargable to ordinary bus and requested the respondents to accept the tax in three equal installments and waive the penalty and interest.
9.Respondent no.1 by letter dated 11.01.2022 directed respondent no.2 to consider the representation made by the petitioner and informed respondent no.2 to accept the tax in installments as per the circular dated 9.08.1999 issued by respondent no.1.
10. Respondent no.2 however, blacklisted the Omnibus of the petitioner and restrained the petitioner to carry out any work using such bus. The petitioner therefore, by letter dated 12.01.2022 requested respondent no.2 to accept the tax in ¾ installments as directed by respondent no.1.
11. The petitioner also produced the bus for inspection by respondent no.2 on 13.01.2022 and by letter dated 13.01.2022 requested the respondent no.2 to accept the tax in installments without insisting for penalty and interest.
12. It is the case of the petitioner that without acceding to the request of the petitioner, Inspector of Motor Vehicles seized the Omnibus of the petitioner on 19.01.2022 under section 12B of the Gujarat Motor Vehicles Tax Act, 1958 on the ground that the tax of the bus was paid initially at the rate applicable to luxury bus from the date of registration dated 12.09.2017 upto March, 2019 and thereafter, at the rate applicable to ordinary bus. The said authority therefore, directed the petitioner to approach the RTO for release of the vehicle by issuing a checking memo dated 19.01.2022.
13. Pursuant to the seizure of the Omnibus of the petitioner, the petitioner made a detailed representation to respondent no.2 by letter dated 19.01.2022 and requested respondent no.2 to recover difference of tax and
