Jammu Automart PVT LTD Th Ashwani Pradhan vs. Union Territory Of Jammu And Kashmir Th Secretary Transport Deptt And Others.

Held

The Court allowed the writ petitions, finding merit in the petitioner's arguments. The Court held that the liability to pay token tax under Section 4 of the J&K Motor Vehicles Taxation Act, 1957, rests with the registered owner or the person in possession of the vehicle, not the seller. The Court noted that the petitioner, acting as a facilitator for registration, collected tax from buyers and deposited it. The Vahaan Portal accepted the tax calculation as submitted by the petitioner, and registration certificates were issued, indicating no objection at that stage. The Court found it unreasonable to attribute fault to the petitioner when the authorities themselves were unclear about the tax calculation method, as evidenced by the subsequent clarification. Crucially, the Court held that any clarification issued by a department to a notification cannot have retrospective effect. Therefore, the impugned notices demanding differential tax for the period from August 1, 2019, to November 26, 2019, were set aside. The Court did not expressly leave any issue undecided.

Facts

The petitioner, Jammu Automart Pvt. Ltd., an authorized Hyundai dealer, challenged an order dated June 22, 2020, directing it to deposit differential token tax for vehicles sold between August 1, 2019, and November 26, 2019. The dispute arose from the calculation of token tax under SRO 492 dated August 1, 2019, which levied a one-time ad-valorem tax on the cost of the vehicle. The petitioner collected this tax from buyers and deposited it online via the Vahaan Portal. Initially, the petitioner calculated the tax on the vehicle's cost excluding GST. However, a clarification dated November 26, 2019, from the Transport Department stated that token tax should be calculated on the aggregate cost, including GST. The impugned order demanded the differential tax for the period before this clarification, which the petitioner argued was retrospective and improperly levied on them, as the ultimate liability lay with the vehicle buyer.

Key Issues

1. Whether the clarification issued by the Transport Department on November 26, 2019, which mandated the calculation of token tax on the aggregate cost of the vehicle including GST, can be applied retrospectively to the period from August 1, 2019, to November 26, 2019, thereby creating a new liability for the petitioner? (Question of law) Petitioner's arguments: - The clarification dated November 26, 2019, effectively added new words to SRO 492 dated August 1, 2019, without the authority issuing the clarification having the jurisdiction to do so. - The clarification imposes a retrospective liability on the petitioner, even though the basic liability to pay token tax rests with the vehicle buyer, not the dealer. - The Transport Department could have directly approached the vehicle buyers for any differential tax, as their details are available. - The Vahaan Portal, from which invoices were generated, accepted the tax calculation without objection, suggesting the authorities were not clear on the calculation method and it is too late to raise this issue. Respondent's arguments: - SRO 492 dated August 1, 2019, introduced a one-time ad-valorem token tax, with the dealer responsible for collecting and depositing it. - The cost of a vehicle always includes the actual cost to the buyer, and it was the petitioner's responsibility to calculate the proper tax. - The clarification dated November 26, 2019, did not add anything new but was a simple clarification that relates back to the date of the basic notification.