Kerala High Court Upholds Tax Liability for Puducherry-Registered Vehicle Operating in Kerala
Court dismisses appeal by T P Trading Company, asserting tax obligations under Kerala Motor Vehicles Taxation Act, 1976
In a significant ruling, the Kerala High Court has dismissed an appeal by M/s. T P Trading Company, affirming the imposition of tax liability on a vehicle registered in Puducherry but found to be used in Kerala. The Division Bench, comprising Justices A. Muhamed Mustaque and Harisankar V. Menon, upheld the decision of the single judge, reinforcing the applicability of the Kerala Motor Vehicles Taxation Act, 1976 in such cases.
The appellant, T P Trading Company, engaged in manufacturing and distribution of plywood with branches nationwide, registered a vehicle in Puducherry. However, the Transport Commissioner of Kerala issued a demand notice for tax payments, citing evidence of the vehicle’s usage in Kerala. The company's defense hinged on the Puducherry registration and NIL GST returns filed there, claiming no permanent use in Kerala.
Despite these claims, the court noted substantial evidence against the appellant. The vehicle had insurance from Kerala, and multiple over-speeding tickets issued in the state reinforced its usage there. Moreover, attempts to deliver notices to the company’s Puducherry address failed, while those sent to their Kerala address succeeded, further supporting the vehicle’s operational base in Kerala.
The bench found the appellant’s argument that over-speeding tickets were not within a continuous 30-day period unconvincing. A surprise inspection also revealed the vehicle at the residence of a company partner in Kerala, with no reply affidavit countering these findings from the appellant. Consequently, the court concluded that the appellant failed to shift the onus of proving the vehicle's non-use in Kerala.
Referencing a similar precedent from the Division Bench in the case of Secretary, Transport Department, Thiruvananthapuram v. Shibumon P.V., the court highlighted the powers to impose tax and potentially cancel registrations under the Motor Vehicles Act, 1988. The appellant’s failure to demonstrate any business activity in Puducherry undermined their claims of non-liability.
The High Court’s decision underscores the rigorous enforcement of regional taxation laws, particularly in cases where vehicles, despite being registered in other states, are predominantly used within Kerala. This judgment reinforces the necessity for businesses to maintain clear operational and registration records to avoid similar tax liabilities.
Bottom Line:
Tax liability under Kerala Motor Vehicles Taxation Act, 1976 arises if the vehicle is found to be used permanently in the State of Kerala, despite its registration in another state. Filing NIL GST returns in another state does not substantiate business activity there, and absence of a valid explanation for usage of the vehicle in Kerala attracts tax liability.
Statutory provision(s): Kerala Motor Vehicles Taxation Act, 1976, Motor Vehicles Act, 1988, Central Goods and Services Tax Act, 2017, State Goods and Services Tax Act, 2017
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