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Judgment
This appeal is filed by the Government.
It is not in dispute that the Respondent financier of the vehicle sought for exemption from payment of tax on the ground of non-use of the vehicle in question by filing an application under form No. 30 under Rule 34A of the KMVT Rules, 1957. A provisional exemption was given subject to the conditions mentioned in the Government notification dated 11.9.1980 bearing No. HTD.95.TMT.77(II).
Subsequently, when the inspector of motor vehicles inspected the declared place of vehicle on 28.2.2003 the vehicle was not found at the declared place, i.e. the garage. Therefore, show cause notice came to be issued on 26.4.2003 calling upon the Respondent financier to show cause why tax should not be levied w.e.f. 1.6.1995. Subsequently, second show cause notice was issued on 27.1.2005 and a reply was sent on 12.5.2005. The 1st Appellant herein directed the Respondent to pay tax for the period between 1.7.1995 to 30.6.1995 by its order dated 31.5.2005. Then another appeal came to be filed before the first appellate authority in No. DCT.SMG. Tax 11/2005-06 and the same came to be dismissed on 23.3.2006.
Aggrieved by the same, W.P.8452/06 was filed. The learned single Judge passed an order on 19.1.2007 holding at paras 26 to 30 as under:
In this view of the matter, I am of the clear opinion that the demand raised in terms of the impugned demand by the 1st Respondent and affirmed by the 2nd Respondent in so far as it relates to the period prior to 28-2-2003 cannot be sustained. It will be clearly contrary to the very exemption order.
However, as the tax liability is for the entire period the Petitioner may be liable for the quarter in which the date 28-2-2003 falls and the demand from this quarter and upto such time when the registration certificate is cancelled in the manner known to law can be justified.
In the circumstances, while the demand towards tax and levy in so far as it relates to the period prior to the quarter in which the date 28-2-2003 occurs are quashed by issue of a writ of certiorari, the demand for the quarter in which the date 28-2-2003 and for the subsequent period in terms of the impugned demand and penalty is sustained, proportionately.
However, it is open to the Petitioner, if so advised, to independently seek for refund of the amount after paying the amount if the Petitioner is able to convince the authorities that the vehicle in fact was not used on roads in terms of Section 7 of the Act by filing a suitable application for the refund of taxes so paid for the subsequent period.
Rule made absolute. Writ petition allowed to the extent indicated above.
Aggrieved by the same, the State has come up in this appeal. Subsequent to the disposal of the writ petition by the learned single Judge, Division Bench of this Court while sitting at Gulbarga circuit bench, in another matter pertaining to Kumaraswamy Mining company while referring to the judgment of the learned single Judge pertaining to these two appeals, ultimately held that the case reported in State of Karnataka Vs. K. Gopalakrishna Shenoy and Another, has to be relied upon and also held that when the vehicle was not found in the notified place i.e. the garage and if the vehicle is moved from that notified place without any permission, exemption cannot be availed of by the person who seeks the benefit of exemption. They have gone further to say that inspite of provisional exemption, such benefit cannot be extended if there is violation of the above conditions as stated the judgment of Gopal Krishna Shenoy''s case supra, and it was held there is statutory liability to pay tax at the prescribed rate once provisional exemption is withdrawn.
In that view of the matter, the appeal is allowed.