High Court of KeralaSingle Judge2013-10-03Writ petitions referred to Division Bench for a...

Dr. Mercy George v. Joint Regional Transport Officer, Sulthan Bathery, Wayanad

Case / Petition Number:W.P (C) Nos.23883, 24064 & 24065 of 2013

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: V. Chitambresh, J.
Judgment Date: 2013-10-03
Court Decision / Holding: Writ petitions referred to Division Bench for authoritative pronouncement; Amicus Curiae appointed to assist the Court.
Final Disposition: Writ petitions referred to Division Bench for authoritative pronouncement; Amicus Curiae appointed to assist.

Parties to the Case

Appellants / Petitioners

Dr. Mercy George W/o Advocate George Joseph, aged 58 years, Sulthan Bathery, Wayanad-673592

Respondents

The Joint Regional Transport Officer, Sulthan Bathery, Wayanad-673592

Legal Representation & Advocates

Counsels for Petitioners

• Sri. K. Jaju Babu
• Sm t. M. U. Vijayalakshmi

Counsels for Respondents

• Sri. Sebastian Champappilly

Case Synopsis & Summary

These writ petitions challenge the computation of a one-time tax under the Kerala Motor Vehicles Taxation Act, 1976, by applying the ‘purchase value’ of a vehicle as defined under the Kerala Value Added Tax Act, 2003. The petitioners point to Ext. P1–P4 invoices showing the vehicle price inclusive of VAT and argue that purchase value, as defined in Section 2(e) of the VAT Act, is the value shown in the original invoice, or, if unavailable, the comparable price fixed by manufacturer or customs. The petitioner emphasizes that VAT paid under the VAT Act is part of the sale consideration and should be included in the purchase value for determining the one-time tax, citing the Sale of Goods Act’s concept that price includes everything payable by the purchaser, such as excise duties and cess, supported by precedents like State of Kerala v. Maharashtra Distilleries, and State of Tamil Nadu v. Kothari Sugars. The court, however, notes prior decisions including Fathima Shirin, Shanavaz, and others, and observes that Fathima Shirin’s view is not in accord with the broader Supreme Court dicta. The judge ultimately states that the matter requires authoritative pronouncement and refers the petitions to a Division Bench, while appointing an Amicus Curiae to assist. The case thus centers on whether VAT should be included in purchase value for tax computation and the need for higher- bench clarity.

Provisions of Law Cited

Kerala Value Added Tax Act, 2003 (Section 2(e))Kerala Motor Vehicles Taxation Act, 1976 (Section 3)Sale of Goods Act, 1930 (Section 2(10))

Legal Doctrines & Maxims

Purchase value has wider import than purchase price; tax paid forms part of value of goods; tax under VAT Act is on the transaction and excise duty/cess are part of sale consideration; value added tax adds to the value of goods.

Submissions & Arguments

Contentions of Appellants / Petitioners

The applicants contended that the 'purchase value' of a vehicle, as defined in Section 2(e) of the Kerala Value Added Tax Act, 2003, includes the VAT paid and must be based on the original purchase invoice. Citing State of Kerala v. Maharashtra Distilleries, State of Tamil Nadu v. Kothari Sugars, and BPL Limited v. State of Karnataka, they argued that taxes forming part of the sale price should be included in the purchase value for calculation of the onetime tax under the Motor Vehicles Taxation Act. They criticized Fathima Shirin’s ruling for diverging from these precedents and urged reconsideration by a Division Bench.

Contentions of Respondents

The respondents contended that the purchase value should exclude VAT, aligning with Fathima Shirin and other contrary precedents, arguing that VAT is a separate levy not to be absorbed into the purchase value for one-time tax calculations. They highlighted potential revenue implications of including VAT and emphasized the need for definitive pronouncement by a larger bench to maintain fiscal consistency.

Cited Precedents (7)

Case Name	Citation	Treatment	Explanation
State of Kerala v. Maharashtra Distilleries Ltd. and others	(2005) 141 STC 358 (SC)	Positive	Used to support that excise duty forms part of the sale consideration and that taxes add to the value of goods.
State of Tamil Nadu v. Kothari Sugars & Chemicals Ltd.	(1996) 101 STC 197	Positive	Quoted to show that the total consideration includes price and other expenses payable by the purchaser.
BPL Limited v. State of Karnataka and another	(2008) 11 VST 835 (Kar)	Positive	Cited to reinforce that amounts paid by a dealer to purchase goods are part of the value of goods.
Bolari Ores Ltd. v. State of Orissa	(1974) 2 SCC 777	Positive	Included as authority that VAT-like taxes contribute to the value for tax purposes.
Jai Prakash and others v. State of U.P. and others	(2004) 13 SCC 390	Positive	Cited for the view that taxes are embedded in the price of goods in the assessment of value.
Fathima Shirin v. Joint Regional Transport Officer	(2013) 3 KLT 945 (DB)	Distinguished	The present judgment distinguishes this decision and indicates it does not reflect the correct approach, preferring broader precedents.
Shanavaz v. The Transport Commissioner and others	W.P.(C) No.29785/2012	Positive	Earlier view that purchase value includes sales tax is acknowledged as supportive of inclusion in the present reasoning.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR** **& THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **FRIDAY, THE 6TH DAY OF DECEMBER 2013/15TH AGRAHAYANA, 1935** ## **WP(C).No. 23883 of 2013 (I)** **----------------------------** **PETITIONER :** **--------------------** **DR. MERCY GEORGE W/O.ADVOCATE GEORGE JOSEPH AGED 58 YEARS, RESIDING AT: MANIMALATHARAPPIL HOUSE SULTHAN BATHERY, WAYANAD-673592.** **BY ADVS.SRI.K.JAJU BABU SMT.M.U.VIJAYALAKSHMI** **RESPONDENT :** **-----------------------** **THE JOINT REGIONAL TRANSPORT OFFICER SULTHAN BATHERY, WAYANAD-673592.** **BY SPL. GOVT. PLEADER SRI. SEBASTIAN CHAMPAPPILLY** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06-12-2013, ALONG WITH WA NO. 1646/2013 & CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Mn** **...2/-** ## **WP(C).No. 23883 of 2013 (I)** **---------------------------------------** ## **APPENDIX** **PETITIONER(S)' EXHIBITS :** **-----------------------------------------** **EXT. P1: COPY OF THE INVOICE NO.CLT-V-0164 DATED 13.08.2013 ISSUED BY THE GERMAN MOTORS TO THE PETITIONER.** **EXT. P2: COPY OF THE SALE CERTIFICATE DATED 13.08.2013 SHOWING THE DELIVERY OF VEHICLE TO THE PETITIONER.** **EXT. P3: COPY OF THE VEHICLE DATA SHEET DATED 13.08.2013 ISSUED BY THE GENERAL MOTORS.** **EXT. P4: COPY OF THE TEMPORARY CERTIFICATE OF REGISTRATION DATED 13.08.2013 ISSUED BY THE RTO, KOZHIKODE TO THE PETITIONER.** **RESPONDENT(S)' EXHIBITS : NIL** **-----------------------------------------------------------** ## **//TRUE COPY//** **P.S. TO JUDGE Mn** **“C.R.”** ## **V.CHITAMBARESH, J.** ------------------------------- ## **W.P (C) Nos.23883, 24064 & 24065 of 2013** ------------------------------- **Dated this the 3[rd] day of October, 2013** ## **REFERENCE ORDER** Does the ' _purchase value_ ' of a vehicle take in the tax payable under the Kerala Value Added Tax Act, 2003 in order to decipher the one-time tax payable under the Kerala Motor Vehicles Taxation Act, 1976 ('the Act' for short) ? 2. The term ' _purchase value_ ' has been defined under ## Section 2(e) of the Act as follows:- _“_ _**'Purchase Value'** means the value of the vehicle as shown in the original purchase invoice._ _Provided that where the purchase value of any vehicle including a vehicle imported from other countries or a vehicle acquired or obtained otherwise than by way of purchase, is not ascertainable on account of nonavailability of the invoice, then the purchase value shall be the value or price at which the vehicles of like kind or of same specifications is already registered or available with the manufacturer or as fixed by the Customs and Central Excise Department for the purpose of levying customs duty, as the case may be.”_ The vehicles in question are not imported from abroad and the retail invoices (Ext.P1) are available which very much includes the tax paid under the Kerala Value Added Tax Act, 2003 in the sale consideration. In fact none of the provisions of the 'Act' W.P (C) Nos.23883, 24064 & 24065 of 2013 2 indicate the avoidance of the tax paid under the Kerala Value Added Tax Act, 2003 in the determination of the ' _purchase value_ ' of a vehicle. 3. The transactions in question are governed by the Sale of Goods Act, 1930 and the sale becomes complete by payment of consideration coupled with delivery of possession of the vehicle. Section 2(10) of the Sale of Goods Act, 1930 defines _'price'_ to mean the money consideration for a sale of goods. The money consideration obviously includes the price, excise duty, cess or any other tax imposed under the Acts applicable to the area. It has been held in _**State of Kerala and others v. Maharashtra Distilleries Ltd. and others**_ [(2005) 141 STC 358 (SC)] that Excise Duty paid form part of the sale consideration. The Supreme Court in _**State of Tamil Nadu v. Kothari Sugars & Chemicals Ltd.**_ [(1996) 101 STC 197] held as follows:- _“Thus the total amount of consideration for the purchase of goods would include the price strictly so called and_ W.P (C) Nos.23883, 24064 & 24065 of 2013 3 _also other amounts which are payable by the purchaser or which represent the expenses required for completing the sale as, the seller would ordinarily include all of them in the price at which he would sell the goods.”_ ## 4. Mr.Justice R.V.Raveendran speaking for the Bench ## in _**BPL Limited v. State of Karnataka and another**_ [(2008) 11 ## VST 835 (Kar)] observed as follows:- _“It is clear therefrom that the amount paid by a dealer to purchase the goods constitutes part and parcel of the value of the goods and it is immaterial how the seller has segregated the consideration under the various heads.”_ The term ' _purchase value_ ' is of wider import than _'purchase price'_ and the very concept of the Kerala Value Added Tax Act, 2003 is that the tax paid adds to the _'value'_ of the goods. It is incomprehensible as to how the tax under the Kerala Value Added Tax Act, 2003 alone could be excluded when Excise Duty, Cess and other taxes are included in the _'purchase value'._ 5. The liability to pay one-time tax under Section 3 of the Act as per the table given in Annexure I to the Schedule thereof is dependant on the _'purchase value'_ referable to the sale 4 W.P (C) Nos.23883, 24064 & 24065 of 2013 consideration. The tax under the Act is in the nature of regulatory and compensatory measure and the power is exercised to impose taxes on motor vehicles which use the roads in the State. The following decisions are apposite:- i) _**Bolari Ores Ltd. v. State of Orissa**_ [(1974) 2 SCC 777] ii) _**Jai Prakash and others v. State of U.P. and others**_ [(2004) 13 SCC 390] The tax under the Kerala Value Added Tax Act, 2003 is on the transaction and the tax under the Act is on the vehicle for use on public road. 6. None of the salient aspects referred to above have been considered in _**Fathima Shirin v. Joint Regional Transport Officer**_ [(2013) 3 KLT 945 (DB)]. The declaration therein that the _'purchase value'_ of a vehicle does not include the tax suffered under the Kerala Value Added Tax Act, 2003 militates against the decisions of the Supreme Court referred to above. A learned single Judge of this Court in Shanavaz v. The W.P (C) Nos.23883, 24064 & 24065 of 2013 5 Transport Commissioner and others [W.P.(C) No.29785/2012] has earlier held that _'purchase value'_ has to be determined reckoning the sales tax also. I am therefore unable to subscribe to the view taken by the Division Bench in Fathima Shirin's case and do feel that the decision requires immediate reconsideration. 7. The Special Government Pleader points out that the revenue due to the State would be badly hit if the dictum laid down in Fathima Shirin's case is followed for payment of onetime tax. It is also contended that a practice hitherto followed for decades is abruptly stopped by excluding the value added tax from the _'purchase value'_ in determining the one-time tax. The issues involved in these writ petitions have a serious impact on the revenue due to the State and I therefore appoint Mr.K.P.Abdul Azeez, Advocate as Amicus Curiae to assist the Court. I refer these writ petitions to the Division Bench of this Court for an authoritative pronouncement. The Registry shall W.P (C) Nos.23883, 24064 & 24065 of 2013 6 place the papers before the Honourable Chief Justice for constituting a Bench of appropriate strength. **V.CHITAMBARESH, Judge.** nj.