Motor Vehicles Act Does Not Mandate Re-Registration Fee: J&K High Court Quashes 9% Tax Demand On Vehicle from Haryana

Striking down the imposition of a 9% token tax on a vehicle brought into the Union Territory from Haryana Justice Javed Iqbal Wani ruled that this additional tax was illegal and discriminatory.

Background:

The case originated when petitioner Ishfaq Ahmad Tramboo, a resident of Srinagar, brought his vehicle, initially registered in Gurgaon, Haryana, to the Union Territory (UT) of Jammu and Kashmir in October 2023. As Tramboo intended to use the vehicle in the UT for more than 12 months, he sought to have it registered with the local authorities as per the Motor Vehicles Act, 1988.

However, respondent 3, the local transport authority, demanded that Tramboo pay 9% of the vehicle's declared value, approximately Rs. 4.00 lakhs, as a condition for assigning a new registration mark.

Tramboo, through his counsel Mr. Hakim Suhail Ishtiaq, contested the demand, arguing that such a requirement was not supported by the Motor Vehicles Act, 1988. He heavily relied on a previous Division Bench judgment in Zahoor Ahmad Bhat and another vs. Government of J&K and Others (WP(C) 669/2021), where the Court had ruled that lifetime tax could not be levied merely on the presumption that a vehicle registered outside Jammu and Kashmir had remained in the UT for over 12 months.

On the other hand, the respondents defended the demand, citing Section 3 of the J&K Motor Vehicles Taxation Act, 1957, which they argued allowed them to charge a token tax (road usage tax) on vehicles registered outside the UT.

Court Observations:

Justice Wani, presiding over the case, meticulously reviewed the relevant sections of the Motor Vehicles Act, 1988, including Sections 41, 46, and 47. The Court observed that the Act mandates the registration of a vehicle only once, with the assigned registration mark being valid across India.

The Act does not provide for re-registration or the payment of additional fees when a vehicle is moved to another state or UT, apart from specific provisions related to the assignment of a new registration mark after 12 months, the court underscored.

Clarifying that the J&K Motor Vehicle Taxation Act, 1957, operates in a different domain and does not serve as a prerequisite for the registration of a vehicle under the Motor Vehicles Act, 1988 Justice Wani cited the earlier Division Bench judgment in Zahoor Ahmad Bhat, which was upheld by the Supreme Court and reiterated that lifetime tax could not be imposed on the presumption of the vehicle's extended stay in the UT.

In light of these observations, the Court allowed the petition, directing the respondents to assign a new registration mark to Tramboo's vehicle without demanding the 9% token tax.

The authorities were also granted the liberty to pursue a refund of the token tax from the Haryana registration authority if necessary.

Case Title: Ishfaq Ahmad Tramboo Vs UT of J&K

Citation: 2024 LiveLaw (JKL) 238

Mr. Hakim Suhail Ishtiaq, Advocate represented the petitioner, Mr. Jehangir Ahmad Dar, GA appeared for the respondents.

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