INDIAN TELEPHONE INDUSTRIES DOORVANINAGAR Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THE petitioner is a public sector undertaking and the registered owner of a power tiller bearing Registration No. 7334. The tiller was exempted from the payment of tax under the Karnataka Motor Vehicles Taxation Act, 1957 from the date of its Registration in April, 1971. More than 17 years later, the Assistant Regional Transport Officer, Bangalore, issued a Demand Notice calling upon the petitioner to pay a sum of Rs. 10,657-50 representing tax due under the Act for the period 1-4-1971 to 30th September, 1988. The notice justified the demand on the ground that the petitioners was not solely dependant upon agricultural income which was according to the respondent an essential condition for an exemption under Section 16 (3) of the Taxation Act, read with Rule 85-B of the Motor Vehicles Rules 1939 introduced by Karnataka Motor Vehicles Rules 1939 introduced by Karnataka Motor Vehicles (6th Amendment) Rules 1983. Aggrieved, the petitioner has questioned the validity of the Demand in the present proceedings.

(2.) SMT. Sangeetha, counsel for the petitioner raised a short point in support of the petition. She urged that Sec. 16 (3) of the Karnataka Motor Vehicles Taxation Act, exempted from payment of tax Motor Vehicles designed and used for carrying out such agricultural operations, as may be prescribed. The agricultural operations prescribed for purposes of Sec. 16b are found in Rule 36 of the Motor Vehicles Taxation Rules 1957 which was on the Statute Book during the relevant period although omitted from the same with effect from December, 1987. Rule 36, it was, contended did not nor did Sec. 16 (3), make dependence of the owner of the Motor Vehicles on agricultural income, as one of the conditions for the grant of exemption from payment of tax. It was urged that the respondent had erroneously read the requirements of Rule 85-B of the Motor Vehicles Rules 1939 as a condition of eligibility for grant of exemption under the Motor Vehicles Taxation Act. There is considerable merit in these submissions. Section 16 (3) exempts from payment of tax Motor Vehicles which are designed and used solely for carrying out the prescribed agricultural operations. Rule 36 prescribes the agriculture operations that qualify for exemption under Section 16 (3) and includes operations such as tilling, sowing, weeding, harvesting, crushing of agricultural produce, reclamation and levelling of the land for agriculture, transportation of persons, materials and manure to the agricultural farm, solely for the purpose of agricultural and transportation of agricultural produce from the agricultural farm to the house of the owner. From a reading of Section 16 (3) read with Rule 36 of the Rules framed thereunder, it is apparent that the dependence of the owner of the Motor Vehicle upon income drawn out of agricultural pursuits, is not one of the requirements for the grant of exemption from payment of tax under the Act. The respondent appears to be conscious of this position for he has referred to Rule 85-B of the Motor Vehicles Rules 1939 in support of the view taken by it that such dependence is an essential condition. Rule 85-B, may at this stage be extracted :

(3.) IN the result, this petition succeeds and is hereby allowed. The impugned Demand-Notice is quashed, reserving liberty for the respondent as indicated above, to raise a fresh demand should it be so advised to do in accordance with law after affording to the petitioner a reasonable opportunity of being heard in the matter.