Joint Regional Transport Officer (Taxation Officer), Sub Regional Transport Office, Uzhavoor, Kottayam District, Kerala vs Deepu C Jose

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** ## **&** **THE HONOURABLE MR.JUSTICE P.G. AJITHKUMAR FRIDAY, THE 21[ST] DAY OF JULY 2023 / 30TH ASHADHA, 1945** **W.A. NO. 461 OF 2018** **AGAINST THE JUDGMENT DATED 10.10.2017 IN W.P.(C) NO.20799 OF 2017 OF HIGH COURT OF KERALA** **APPELLANT/RESPONDENT:** **THE JOINT REGIONAL TRANSPORT OFFICER (TAXATION OFFICER), SUB REGIONAL TRANSPORT OFFICE, UZHAVOOR P.O., KOTTAYAM DISTRICT, PIN-686634.** **BY SRI MOHAMMED RAFIQUE-SPL GOVERNMENT PLEADER (TAXES)** ## **RESPONDENT/PETITIONER:** **DEEPU C JOSE** **AGED 30 YEARS, S/O. V. C. JOSE, VADAKKEKUDIYIRIPPIL HOUSE, UZHAVOOR P.O., KOTTAYAM DISTRICT, PIN-686634.** **BY ADV SRI.G.HARIHARAN (BY ORDER)** **THIS WRIT APPEAL HAVING COME UP FOR FINAL HEARING ON 21.07.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **2** W.A.No.461 of 2018 ## **JUDGMENT** ## P.G.Ajithkumar, J. Does the law laid down in **Gopalakrishnan v. R.T.O. Alappuzha [1997 (1) KLT 386]** interdict the right of the respondent to pay reduced tax in consequence of changing of pushback seats to ordinary seats in his contract carriages? 2. The learned Single Judge answered the said question in favour of the respondent holding that the law laid down in **Gopalakrishnan [1997 (1) KLT 386]** does not apply to the facts of the case on hand inasmuch as the number of seats at the time of first registration of the contract carriage have not been reduced and the benefit of the change of law brought about by the Kerala Finance Act, 2014 cannot be denied to the respondent in the light of the law laid down by the Apex Court in **M/s Kelvinator of India Ltd. v. State of Haryana [(1973) 2 SCC 551]** . 3. The respondent is the owner of two contract carriage vehicles having seat capacity of more than 20; KL67-A-4517 and KL-67-A-4549. At the time of first registration, these vehicles were fitted with pushback seats. Later, **3** W.A.No.461 of 2018 pushback seats were replaced with ordinary seats. The rate of tax, after Kerala Finance Act, 2014, per pushback seat is Rs.1,000/- and per ordinary seat is Rs.750/-. The respondent requested the transport authorities to request to inspect the vehicles and he claimed reduce tax tax. The transport authority as per Ext.P5 proceedings dated 27.07.2017 declined the request for reducing tax stating that the respondent was bound to pay tax as applicable as on its first registration. The learned Single Judge considered the legality of the said order and took the view that the transport authority was wrong in the light of the law laid down by the Apex Court in **Kelvinator of India Ltd. [(1973) 2 SCC 551]** and this Court in **Gopalakrishnan [1997 (1) KLT 386]** and also **Musthaffa K.K. and others v. Assistant Motor Vehicle Inspector, Thrissur [2014 (1) KLT 575].** 4. After the Kerala Finance Act, 2014 came into force the difference in the tax for the contract carriages having permit to carry more than 20 passengers is as follows:- i) For contract carriages fitted with push back seats, tax for every passenger is Rs.1,000/-. **4** W.A.No.461 of 2018 ii) For ordinary contract carriages, tax for every passenger is Rs.750/-. 5. The learned Single Judge considered in part on account of the change brought about by the Kerala Finance Act, 2014 in the light of the law laid down by the Apex Court and also this Court and held as follows:- “It will be clear, therefore, that the amendment to the schedule, so as to bring an additional category of contract carriages for the purposes of levy of tax, was seen necessary for the purposes of augmenting the revenue of the State through a higher rate of tax being made applicable to seats, which had the effect of providing a luxury to the passengers. The apprehension with regard to loss of revenue was essentially with regard to there being a reduction in the number of seats and consequential reduction in the tax payable, in the event of the contract carriage substituting the ordinary seats with push back seats, with the apprehension that fitting the vehicle with push back seats would have the effect of reducing the total number of seats in the vehicle. I find, however, that under the provisions of the Kerala Motor Vehicle Taxation Act and the schedule thereunder, the levy of tax is with regard to the seating capacity, and it is trite that the seating capacity is one that is indicated in the permit issued to the operator concerned for operating **5** W.A.No.461 of 2018 the contract carriage. Inasmuch as in the instant cases, there is no dispute that the seating capacity of the contract carriage has not been altered, the mere changeover from push back seats to ordinary seats will not cause any revenue loss to the petitioner on account of any reduced seating capacity. The revenue loss, if any, can only be attributed to the differential rate of tax stipulated for push back seats as against ordinary seats. The question then arises as to whether, the said revenue loss can be cited as a ground for demanding a higher rate of tax from the petitioner, who has converted the push back seats in his vehicle to fixed seats, so as to bring the vehicle within the classification of ordinary contract carriages with the same seating capacity. I note, in this connection, that a Single Judge of this Court had, by the judgment dated 11.11.2016 in W.P(C).No.29123 of 2016 (produced as Ext.P9 in W.P(C).No.7046 of 2017), clearly found that a mere change in the type of seats in a contract carriage, without a change in the number of seats, cannot be a reason for the Motor Vehicle Department to deny a request for a change in the type of seats even though the change in the type of seats would result in a reduced liability to tax for the operator concerned. While taking such a view, the learned Judge placed reliance on the decision of the Supreme Court in **Kelvinator of India Ltd., M/s. v. State of Haryana [1973 (2) SCC 551],** wherein it was held that if a **6** W.A.No.461 of 2018 party had a choice of arranging its affairs in such a manner as to avoid its liability to tax, it was open to the party to so arrange his affairs so as to minimise/avoid the tax liability. While on the subject, I also find that, the decisions of the Division Bench in **Gopalakrishnan v. R.T.O, Alleppey [1997 KHC 75]** and **Musthaffa K.K. And Others v. Assistabt Motor Vehicle Inspector, Thrissur and Another [2014 (1) KLT 575],** which are relied upon by the learned Government Pleader, are clearly distinguishable on facts. In both those decisions, the point to be decided was whether a possible loss of revenue could be a reason cited by the authorities under the motor vehicle tax to deny permission to the operator concerned for reducing the number of seats in a contract carriage vehicle. While in the former decision, a Division Bench of this Court had opined that the loss of revenue could be a valid ground for denying permission under Section 52 of the Motor Vehicles Act for an alteration in the seating capacity of the vehicle concerned, the Division Bench in the later decision took note of the Full Bench decision of this Court **Vishwanatha Menon v. Addl. Registering Authority [1998 (2) KLT 112]** and found that, the operator of a contract carriage, who intended to reduce the seating capacity in a vehicle covered by contract carriage permit, did not have to seek any permission for the same under Section 52 of the Act, since the liability to tax was on the seating capacity as specified by the **7** W.A.No.461 of 2018 manufacturer of the vehicle, and in terms of the permit that was granted to the operator in question. The Full Bench, which considered the matter, had left open the issue as to whether the possible loss of revenue could be treated as a ground in cases were a permission was required for the purposes of an alteration under Section 52 of the Act. As already noticed, in the instant case, since the alteration sought for is not a reduction in the seating capacity but only in the type of seats that are fitted in the vehicle, I am of the view that, the issue of any loss of revenue, in the sense understood by the Division Bench in the cases aforementioned, does not arise for consideration. Further, inasmuch as it is not in dispute that the seating capacity of the vehicle has not been altered and the alterations made are only in respect of the kind of seats, namely from push back seats to fixed seats, I am of the view that the alteration effected by the petitioner would necessitate a changed stand to be taken by the respondents, in respect of the tax payable under the Kerala Motor Vehicle Taxation Act. This is because it is trite that the levy of tax has to be on a vehicle, in the state at which it is presented before the motor vehicle authorities at the commencement of the assessment period. In the instant case, since at the commencement of the assessment period, the vehicle pursuant to its alteration, had to be classified as an ordinary contract carriage permit with carry more than 20 passengers, **8** W.A.No.461 of 2018 the tax for the relevant period would necessarily have to be at the rate of Rs.750/- for every passenger and not at the enhanced rate of Rs.1000/- for every passenger, which is the rate applicable to contract carriages fitted with push back seats. I, therefore, allow these writ petitions by directing the respondent to fix the tax structure of the vehicles in question, based on the observations in the judgment, and at the rates applicable to ordinary contract carriages that are permitted to carry more than 20 passengers. As a consequence of the findings in this judgment, Ext.P5 order produced in W.P(C).No.20799 of 2017 is quashed to the limited extent that it directs the petitioner to continue to pay tax at the rate applicable to contract carriages with push back seats.” 6. In **Joint Regional Transport Officer (Taxation Officer), Angamaly v. Shaiju T.C. [2018 (4) KHC 496]** , a similar question was considered by a Division Bench of this Court. The Division Bench held that change over from pushback seats to ordinary seats without any change to the seating capacity at the time of first registration would not disentitle the owner of the stage carriage from claiming the benefit of the reduction of the rate of tax. The law laid down in **Gopalakrishnan [1997 (1) KLT 386]** and in **Musthaffa** **9** W.A.No.461 of 2018 **K.K. [2014 (1) KLT 575]** would disable the owner of a stage carriage from claiming reduction in tax by bringing down the number of seats from what was at the time of its first registration. On a query made by this Court, the learned Special Government Pleader, on instructions, would submit that the vehicles in question are not governed by the Code of Practice for Bus Body Design and Approval in AIS-052 (Revision 1): 2018. When the number of seats is not reduced, whereas nature of the seats alone is changed, the aforesaid proposition of law does not get attracted. We find no reason to depart from the view taken by the Division Bench in **Joint Regional Transport Officer [2018 (4) KHC 496]** . Therefore, the Writ Appeal can only fail. The appeal is accordingly dismissed. **Sd/-** ## **ANIL K. NARENDRAN, JUDGE** **Sd/P.G. AJITHKUMAR, JUDGE** dkr