P.V.ALI MUBARAK V. THE TRANSPORT COMMISSIONER,

WP(C)/6910/2019

AI Insights

The case involved three writ petitions filed by different petitioners who had purchased motor vehicles valued over Rs. 10 lakhs during the financial year 2017-18. The core issue was whether the 1% Tax Collected at Source (TCS) by the dealer from the purchaser should be included in the 'purchase value' as defined under Section 2(e) of the Kerala Motor Vehicles Taxation Act, 1976, for the purpose of levying motor vehicle tax. The petitioners argued that the TCS is separate from the purchase value, citing the Income Tax Act, 1961, and a recent amendment to the Kerala Motor Vehicles Taxation Act, 1976, which explicitly excludes TCS from the purchase value. The government contended that the amendment applies prospectively and not retrospectively, thus justifying the inclusion of TCS in the purchase value for vehicles purchased before April 1, 2020.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 726010 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 02-08-2023
• Assessment Year: misc
• Laws Referred To: Kerala Motor Vehicles Taxation Act, 1976, Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RESHMITA RAMACHANDRAN
• Assessee Lawyers: K SRIKUMAR; P R AJITHKUMAR; K CHANDRAN; S A MANSOOR PATTANAM; P V THOMAS
• Keywords: Income Tax; Motor vehicle tax; Purchase value; Tax collected at source; TCS
• Section: 2(e); 206C(1); 206C(1F)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH WEDNESDAY, THE 2ND DAY OF AUGUST 2023 / 11TH SRAVANA, 1945 WP(C) NO. 33235 OF 2017 PETITIONER/S: PAULOSE K.V AGED 74 YEARS KODIYATTU, KARIKODE, MULANTHURUTHY, ERNAKULAM - 682 314. BY ADVS. SRI.K.SRIKUMAR (SR.) SRI.P.R.AJITHKUMAR SRI.K.MANOJ CHANDRAN SRI.S.A.MANSOOR PATTANAM SRI.P.V.THOMAS RESPONDENT/S: 1 THE TRANSPORT COMMISSIONER TRANSPORT COMMISSIONERATE, 2ND FLOOR, TRANS TOWERS, VAZHUTHACAUD, THYCAUD P.O., THIRUVANANTHAPURAM, PIN - 695 014. 2 THE JOINT REGIONAL TRANSPORT OFFICER MOTOR VEHICLES DEPARTMENT, TRIPUNITHURA - 682 031. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.08.2023, ALONG WITH WP(C).6910 & 21609/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) Nos.33235/2017, 6910 & 21609 of 2019 2 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH WEDNESDAY, THE 2ND DAY OF AUGUST 2023 / 11TH SRAVANA, 1945 WP(C) NO. 6910 OF 2019 PETITIONER/S: 1 P.V.ALI MUBARAK AGED 51 YEARS DESIGNATED PARTNER OF BRIDGEWAY MOTORS LLP, PADIKUNNU, NILAMBUR P.O., MALAPPURAM, KERALA. 2 M/S.BRIDGEWAY MOTORS LLP, NH-17, KANNUR ROAD, WEST HILL P.O., KOZHIKODE- 673005, REPRESENTED BY ITS CEO, SHAJI VAMADEVAN. BY ADVS. K.SRIKUMAR (SR.) SRI.K.MANOJ CHANDRAN SMT.AMMU CHARLES RESPONDENT/S: 1 THE TRANSPORT COMMISSIONER, TRANSPORT COMMISSIONERATE, 2ND FLOOR, TRANS TOWERS, VAZHUTHACAUD, THYCAUD P.O., THIRUVANANTHAPURAM, PIN- 695014. 2 REGIONAL TRANSPORT OFFICER, MOTOR VEHICLES DEPARTMENT, CIVIL STATION, KOZHIKODE- 673020. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.08.2023, ALONG WITH WP(C).33235/2017 & 21609/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) Nos.33235/2017, 6910 & 21609 of 2019 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH WEDNESDAY, THE 2ND DAY OF AUGUST 2023 / 11TH SRAVANA, 1945 WP(C) NO. 21609 OF 2019 PETITIONER/S: C.C.VARGHESE, AGED 75 YEARS MAPPILASSERIL HOUSE, NEDUMPARA ESTATE, KAILASANADU.P.O., NEDUMKANDAM, IDUKKI DISTRICT-685 553 BY ADVS. C.JOSEPH ANTONY SHRI. JOHN MANJOORAN RESPONDENT/S: 1 THE TRANSPORT COMMISSIONER, TRANSPORT COMMISSIONERATE, 2ND FLOOR, TRANS TOWERS, VAZUTHACAUD P.O., THIRUVANANTHAPURAM-695 033 2 THE JOINT REGIONAL TRANSPORT OFFICER, MOTOR VEHICLE DEPARTMENT, UDUMPANCHOLA, IDUKKI DISTRICT-686 554 BY ADV GOVERNMENT PLEADER OTHER PRESENT: RESHMITA RAMACHANDRAN-GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.08.2023, ALONG WITH WP(C).33235/2017 & 6910/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) Nos.33235/2017, 6910 & 21609 of 2019 4 JUDGMENT [WP(C) Nos.33235/2017, 6910 & 21609 of 2019] 1. Heard Sri. K. Manoj Chandran and Sri.Joseph Antony C., learned counsel for the petitioners and Smt.Reshmita Ramachandran, learned Government Pleader. 2. In all these three writ petitions, the question involved is that whether tax collected at source (for short, “TCS”) by the dealer from the purchaser on the vehicles having purchase value of more than Rs.10 lakhs, TCS deducted at the rate of 1%, would be included within the definition of purchase value as defined under Section 2(e) of the Kerala Motor Vehicles Taxation Act, 1976. 3. Petitioners had purchased motor vehicles in the year 2017 -18, having purchase value more than Rs.10 lakhs. The respective learned counsel for the petitioners submit that Section 206C(1) of the Income Tax Act, 1961 (hereinafter be referred to as 'I.T.Act, 1961), mandates the seller of a motor vehicle of the value exceeding Rs.10 lakhs to collect tax at the rate of 1% (before the amendment in the year 2021) from the buyer of the purchase value of the WP(C) Nos.33235/2017, 6910 & 21609 of 2019 5 vehicle. The counsels therefore submit that sub-section (1) of Section 206C of the Income Tax Act itself postulates the tax collected at source at the rate of 1% to be over and above the purchase value of motor vehicle. It is therefore, submitted that when income tax itself differentiate between the purchase value and the TCS @ 1% collected thereon, inclusion of the TCS at the rate of 1% in the purchase value for the purposes of levying motor vehicles tax under the Kerala Motor Vehicles Taxation Act, 1976 would run contrary to the proviso to Section 206C(1) of I.T. Act. 4. The further submission of the learned counsels for the petitioners is that the legislature itself has amended Kerala Motor Vehicles Taxation Act, 1976 by the Finance Act, 2020 whereby a proviso has been added in Section 2(e) of the Kerala Motor Vehicles Taxation Act, 1976 wherein it has been specifically provided that purchase value of the motor vehicle would not include TCS amount, the proviso added in Section 2(e) of the Kerala Motor Vehicles Taxation Act, 1976 is only clarificatory in nature and it could not be said that before the amendment in the year 2020 Kerala Motor Vehicles Taxation Act, 1976 provided for inclusion of TCS in WP(C) Nos.33235/2017, 6910 & 21609 of 2019 6 the purchase value of the motor vehicle. 5. On the other hand, Smt. Reshmita Ramachandran, the learned Government Pleader has contended that the amendment has come only with effect from 1st April, 2020 and, therefore, the proviso would have the prospective effect and not the retrospective effect in respect of the vehicles which had been purchased before 01.04.2020 having value of more than Rs.10 lakhs. She submits that the Transport Authority was justified in including the TCS amount in the purchase value of the vehicles purchased by the petitioners. 6. I have considered the submissions of the counsel representing the parties. 7. Section 206C(1F) of the I.T.Act, 1961 reads as under: (1F)Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding ten lakh rupees, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to one per cent of the sale consideration as income-tax. 8. The bare reading of sub-section (1) of Section 206C of the I.T. Act, 1961 disclose the TCS is to be collected on the WP(C) Nos.33235/2017, 6910 & 21609 of 2019 7 purchase value. The said purchase value does not include the TCS. It is 1% income tax, which is collected by the dealer from the purchaser of the vehicle and the purpose of providing the collection of TCS at 1% is to have track on the high value transactions. At no stretch of imagination it can be said that sub-section (1) of Section 206C of the I.T.Act contemplates the inclusion of 1% TCS in the purchase value. 9. Section 2(e) of the Kerala Motor Vehicles Taxation Act, 1976 defines the purchase value. Section 2(e) of the Act reads as under: “purchase value”, means the value of the vehicle as shown in the purchase invoice and includes value added tax, [goods and services tax or such other tax as may be levied by the Central or State Government,] cess and customs/excise duty chargeable on vehicles [or the sale amount shown in the homologation uploaded by the manufacturer in the Parivahan portal administered by the Ministry of Transport and Highways, which ever is higher.] Provided that the discount or rebate given by the dealer to the registered owner shall not be deducted from the bill amount for computing the purchase value: [Provided further that the tax collection at source (TCS), which is a part of income tax payment, WP(C) Nos.33235/2017, 6910 & 21609 of 2019 8 specified if any, in the purchase invoice shall not be included in the purchase value,] Provided [also] 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 non availability of the invoice, the purchase value shall be the value or price of the vehicles of the same specifications which are already registered or available with the manufacturer or as fixed by the Customs and Central Excise Department for the purpose of levying customs duty and includes excise or customs duty levied on the purchase of a motor vehicle, as the case may be.] 10. If TCS to be included in the purchase value, as contended by learned Government Pleader, Smt.Reshmita Ramachandran, then the provisions of Section 2(e) would run contrary to the sub-section (1) of Section 206C of the I.T.Act. The Court has to give harmonious construction between the Central Act and State enactment. The Legislature to avoid this anomaly in the definition clause of the purchase value under Section 2(e) of the Kerala Motor Vehicles Taxation Act, 1976 by way of Amendment by Finance Act, 2020, added proviso in Section 2 (e) of the Kerala Act, specifically WP(C) Nos.33235/2017, 6910 & 21609 of 2019 9 providing that TCS collected by the dealer would not include the purchase value of the vehicle. This Court is therefore, of the view that proviso has to be treated as clarificatory. 11. In view thereof, present writ petitions are allowed, and the inclusion of 1% TCS on the purchase value is set aside. The petitioners are required to pay the motor vehicle tax on the purchase value excluding the TCS collected by the dealer. The demand notices, Exts.P3 and P4 in W.P.(C)No.6910/2019 and Ext.P4 in W.P.(C)No.21609/2019 are set aside. The Assessing Authority may redetermine the tax, if it so required, in the light of the observations made hereinabove. Sd/- DINESH KUMAR SINGH JUDGE Shg WP(C) Nos.33235/2017, 6910 & 21609 of 2019 10 APPENDIX OF WP(C) 33235/2017 PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF THE INVOICE DATED 16.09.2017. EXHIBIT P2 TRUE COPY OF THE CIRCULAR NO. 22/2016 DATED 08.06.2016. EXHIBIT P3 TRUE COPY OF THE TCS CONFIRMATION LETTER 15.09.2017. EXHIBIT P4 TRUE COPY OF THE APPLICATION FOR REGISTRATION OF THE VEHICLE DATED 16.09.2017. EXHIBIT P4(A) TRUE COPY OF THE RECEIPT EVIDENCING PAYMENT OF TAX AMOUNT OF RS.2,98,635-00. EXHIBIT P5 TRUE COPY OF THE LETTER DATED 28.09.2017. EXHIBIT P6 TRUE COPY OF THE TEMPORARY REGISTRATION CERTIFICATE DATED 16.09.2017. WP(C) Nos.33235/2017, 6910 & 21609 of 2019 11 APPENDIX OF WP (C) 6910/2019 PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF THE INVOICE NO.BW011718RIN00114 DATED 25.07.2017. EXHIBIT P1(a) TRUE COPY OF THE INVOICE NO.BW011718RIN00413 DATED 16.02.2018. EXHIBIT P2 TRUE COPY OF THE TAX RECEIPT DATED 15.10.2018 FOR AN AMOUNT OF RS.13,32,993/- EXHIBIT P2(a) TRUE COPY OF THE TAX RECEIPT DATED 15.10.2018 FOR AN AMOUNT OF RS.9,37,381/- EXHIBIT P3 TRUE COPY OF THE NOTICE DATED 05.09.2018 DEMANDING AN AMOUNT OF RS.13,330-00. EXHIBIT P4 TRUE COPY OF THE NOTICE DATED 05.09.2018 DEMANDING AN AMOUNT OF RS.9,374-00 EXHIBIT P5 TRUE COPY OF THE CIRCULAR NO.22/2016 DATED 08.06.2018. EXHIBIT P6 TRUE COPY OF THE INTERIM ORDER IN WP(C) 33235/2017. WP(C) Nos.33235/2017, 6910 & 21609 of 2019 12 APPENDIX OF WP(C) 21609/2019 PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF THE INVOICE NO.VSC/17-18/579 DATED 15.03.2018 EXHIBIT P2 TRUE COPY OF THE CIRCULAR NO.22/2016 DATED 08.06.2016 EXHIBIT P3 A TRUE COPY OF THE REGISTRATION DATED 03.04.2018 EXHIBIT P4 TRUE COPY OF THE NOTICE ISSUED BY THE 2ND RESPONDENT DATED 10.07.2019 "