M/S Ktm Jammu Th Its General Manager Gurvinder Singh vs. Union Territory Of J And K Th Transport Deptt And Ors

Held

The Court held that the impugned order directing the petitioner to deposit the differential token tax was illegal and unsustainable. The Court found merit in the petition, following its own previous judgment in WP(C) No. 1140/2020. The reasoning was that Section 4 of the J&K Motor Vehicles Taxation Act, 1957, clearly places the liability to pay tax on the registered owner or the person in possession of the vehicle, not the seller (dealer). The Court noted that the petitioner, as a dealer, was mandated to collect taxes and fees through the Vahaan Portal, which had accepted their deposits based on the rates derived from SRO 492/2019 (excluding GST) for the period in question. The subsequent clarification dated November 26, 2019, which sought to levy tax on the aggregate cost including GST, could not have retrospective effect. The Court reasoned that attributing fault to the petitioner was unreasonable as the authorities themselves were unclear and accepted the initial tax calculation. The ratio decidendi is that departmental clarifications cannot retrospectively alter tax liability, especially when the primary liability rests with the end-user and the system accepted earlier calculations. The impugned notices were set aside and quashed.

Facts

The petitioner, M/s KTM Jammu, a dealer of KTM motorcycles, challenged an order dated June 22, 2020, from the Registering Authority (Motor Vehicle Department). This order directed the petitioner to deposit the differential amount of token tax/fees for vehicles sold between August 1, 2019, and November 26, 2019. Prior to August 1, 2019, token tax was a fixed levy. On August 1, 2019, SRO 492 revised the tax to 9% or 10% of the vehicle's cost, excluding GST. The petitioner collected and deposited this tax through the Vahaan Portal. On November 26, 2019, a clarification stated token tax should be levied on the aggregate cost, including GST. The petitioner argued this clarification was contrary to law and that the Vahaan Portal accepted their initial deposits.

Key Issues

1. Whether the Registering Authority's order directing the petitioner to deposit the differential token tax for the period August 1, 2019, to November 26, 2019, is legally sustainable, considering the petitioner's role as a dealer and the applicable statutory provisions and departmental clarifications? (Mixed question of law and fact, turning on Section 4 of the J&K Motor Vehicles Taxation Act, 1957, and SRO 492/2019). Petitioner's arguments: The petitioner contended that as a dealer, they are merely facilitators for collecting and depositing the token tax, with the ultimate liability resting on the vehicle owner/buyer as per Section 4 of the J&K Motor Vehicles Taxation Act, 1957. They argued that the Vahaan Portal accepted their deposits based on the rates prevalent before the November 26, 2019 clarification, and the clarification itself was contrary to law by seeking to levy tax on tax (GST). They also relied on a previous judgment of this Court in WP(C) No. 1140/2020, Jammu Automart Pvt. Ltd. V. UT of Jammu and Kashmir, which dealt with a similar issue and quashed similar notices. Revenue's arguments: The respondent, represented by the Dy. AG, did not dispute that the challenge in the present petition was similar to the one decided in WP(C) No. 1140/2020. The judgment indicates the respondent accepted notice and consented to the matter being taken up for consideration.