THE PR. COMMISSIONER OF INCOME-TAX vs. SHRI. PEHIUMAL RAM RAMNANI

The present writ appeals are directed against a common judgment dated 20th April 2018 passed by the learned Single Judge dismissing the writ petitions filed by these Appellants.

By the impugned judgment, the learned Single Judge rejected the plea of the Appellants that Section 4A of the Orissa Motor Vehicles Taxation Act, 1975 (OMVT Act) as amended with effect from 21st November 2017, would have only prospective operation and the onetime tax payable thereunder would not apply to vehicles that were purchased prior to the date of the amendment. In other words, the learned Single Judge has held the amendment to be clarificatory and therefore, the Appellants would have to pay the onetime tax on the Maxi Cabs owned by them even though these such Maxi Cabs may have been purchased prior to 21st November, 2017.

While directing notice to issue in W.A. No.239 of 2018 on 17th May 2018, this Court directed that the impugned judgment shall remain stayed. That interim order has continued since.

The background facts are that each of the Appellants as the owner of Maxi Cab passenger vehicle which was registered with the Regional Transport Officer (RTO), Bhubaneswar on various dates between 3rd July 2012 and 21st November, 2017. The tax under the OMVT Act on such vehicles was payable monthly. According to the Appellants, the tax has been regularly paid on that basis.

With effect from 1st June 1989, Section 4A was inserted in the OMVT Act. It contains a provision for levy and payment of a one- time tax and read as under: “(1) Notwithstanding anything contained in Sections 3 and 4 of this Act, but subject to the other provisions of this section, there shall be levied and paid in respect of every vehicle of the descriptions specified in items 1 and 2 and every Motor Vehicle (being a motor car) covered by items 6 of Schedule-I which is used personally or kept for personal use, onetime tax at the rate equal to ten times the annual rate of tax in respect of thereof as specified in Schedule-I:

Under Section 4 of the OMVT Act, the taxes were to be paid on annual or monthly basis. Section 4A introduced the concept of a one-time tax. This was applicable to vehicles of the description specified in items1 and 2 and every motor vehicle (being motor car) covered by item 6 of Schedule-I which was used personally or kept for personal use. The one-time tax was to be ten times the annual rate of tax in respect of such vehicle. Where the vehicle was already on the road prior to the appointed date, the one-time tax was to be calculated after deducting from the usual one-time tax one fifteenth thereof for each completed period of twelve months commencing on the date of initial purchase or acquisition of the vehicle for which the tax has been paid, but such tax would not be less than one tenth of such usual one-time tax.

Section 4A was amended in 1990 by including a motorcar as part of the vehicles to which the one-time tax would be applicable. The list of vehicles was expanded by a further amendment with effect from 25th February, 2005.

The last amendment with effect from 21st November 2017 applied specifically to ‘Maxi Cabs’. The question that arose before the

This Court has heard the submissions of learned counsel for the parties. The short question that arises for consideration is whether the amendment to Section 4A of the OMVT Act with effect from 21st November 2017 in so far as it applies to ‘Maxi Cabs’ can be said to apply from 1st June 1989 itself i.e., the date when Section 4A was first introduced.

The wording of Section 4A (3) of the OMVT Act makes it clear that the levy and payment of the one-time tax was made compulsory only “in respect of the vehicles registered on or after the appointed date”. It was ‘optional’ in respect of the vehicles registered “prior to that date” While it may be correct to contend that the amendment does not change the “appointed date” of the un-amended provision, it cannot be said to apply to vehicles already registered prior to the amendment to Section 4A thereby making it retrospective. It cannot apply to vehicles which were not even on the road on the original appointed date i.e., 1st June 1989.

With the legislative intent of creating two classes of vehicles i.e., vehicles registered on or after the “appointed date” and those “registered prior to that date” being clear, the classification has to hold good for every new set of vehicles brought within the ambit of Section 4A of the OMVT Act. Admittedly, ‘Maxi Cabs’ was bought within the ambit of Section 4A only with effect from 21st November, 2017. The expression “appointed date” has to, therefore, be understood in that context. When so understood, it is plain that there would be two classes of Maxi Cabs one in respect of which the one-time tax will be compulsorily payable and the other in respect of which it would be optional. Section 4A (3) of the OMVT Act would apply to ‘Maxi Cabs’ that are registered on or after 21st November 2017, the date on which they were brought within the fold of the OMVT Act. For those registered prior thereto, it would be optional.

The following observations of the Supreme Court of India in Doypack Systems Pvt. Ltd. v. Union of India (1998)2 SCC 299 are instructive in this regard:

It is also instructive that vis-à-vis ‘Maxi Cabs’, the authorities continued accepting the monthly tax up to 21st November 2017 as it

Clarificatory amendments are in the limited context where there is ambiguity as regards the true legislative intent. It is contrary to the mischief rule i.e., it is only where there is an omission that has sought to be rectified by way of an amendment the question of the amendment being ‘clarificatory’ would arise.

In the present case, there is no ‘omission’ which was being filled up by way of the amendment with effect from 21st November 2017. It was a conscious decision not to bring Maxi Cabs within the ambit of the one-time tax till the amendment which with effect from 21st November 2017 expanded the ambit of Section 4A (3) of the OMVT Act. The scope and ambit of Section 4A has, as its legislative history depicts, been progressively expanded. This was a conscious decision taken by the legislature and therefore, the amendment with effect from 21st November 2017 by which Maxi Cabs were brought within the ambit of the requirement of compulsory one-time tax in terms of the Section 4A of the OMVT Act, cannot be said to be merely clarificatory.

For the aforementioned reasons, the Court is unable to subscribe to the view taken by the learned Single Judge that the amendment to Section 4A of the OMVT Act with effect from 21st November 2017, was merely clarificatory and that the expression “the appointed date” should be taken to be 1st June, 1989.

Accordingly, the impugned judgment of the learned Single Judge is hereby set aside. It is made clear that vehicles that were registered prior to 21st November 2017 would fall under the “optional clause” and would not be required to compulsorily pay the one-time tax and would be required to pay the one-time tax only for the period from the date of their respective registrations by applying the optional clause.

The writ appeals are allowed in the above terms, but in the circumstances, with no order as to costs.