Onus On Assessee To Prove Puducherry Use Of Vehicle: Kerala High Court Dismisses Appeal, Upholds ₹15.37 Lakh Motor Vehicle Tax Demand On Puducherry-Registered Car
Isabella Mariam
The Kerala High Court Division Bench of Justice A. Muhamed Mustaque and Justice Harisankar V. Menon dismissed the appeal and sustained the motor vehicle tax demand raised in Kerala on a car registered in Puducherry, holding that there was no material to show the vehicle was actually used in Puducherry. The case concerned an assessee engaged in business with a stated branch in Puducherry, which challenged the tax proceedings by relying on registration and GST records there. The Bench noted that the NIL GST returns did not indicate any business operations from Puducherry and concluded that the burden shifted to the assessee to establish that the vehicle was not being used in Kerala so as to avoid liability under the State motor vehicles taxation law.
The appellant, engaged in the manufacture and distribution of plywood with branches across the country, including Kariakal in Puducherry, purchased a car and obtained registration in Puducherry as reflected in Ext.P2. A demand notice (Ext.P6) was later issued by the second respondent directing payment of tax under the Kerala Motor Vehicles Taxation Act, 1976, based on alleged use of the vehicle in Kerala. The appellant replied through Ext.P7, and pursuant to directions in an earlier writ petition, the second respondent issued Ext.P8 demanding Rs.15,37,660/-. Recovery notices (Exts.P10 and P11) were then issued.
The appellant challenged these steps, relying on the tax invoice from Puducherry, the Puducherry registration under the Motor Vehicles Act, and GST registrations to contend that it had permanent business interest in Puducherry and the vehicle was used there. A learned Single Judge dismissed the writ petition, prompting the present appeal. The respondents relied on findings in Ext.P8, including the return of notice sent to the Puducherry address marked “no such address,” service of notice at the Perumbavoor address, insurance issued by a Perumbavoor insurer, six over speeding tickets issued in Kerala, and an inspection report stating that the vehicle was found at the residence of a partner of the appellant on 17.03.2018.
The Court recorded that although the appellant relied on GST registration and returns filed in Puducherry, “the returns were only NIL returns. Such NIL returns do not reflect any business being carried out by the appellant from Puducherry.” It further stated that “much reliance cannot be placed on the additional documents produced… while evaluating the contention raised,” and therefore the prayer for remand was rejected.
The Bench noted the categorical finding in the demand notice that the communication sent to the Puducherry address was returned with the endorsement “no such address.” It observed that the notice served at the Kerala address “gains significance.” The Court stated that the insurance for the vehicle had been obtained in Perumbavoor, and that “as many as 6 over speeding tickets have been issued… by the Kerala Motor Vehicles Department.”
The appellant’s contention that the over speeding tickets did not fall within a continuous 30-day period was “recorded and rejected based on the enquiry report… wherein it is categorically recorded that the vehicle… was found in the residential premises of the partner of the appellant at the time of a surprise inspection on 17.03.2018.” The Court noted that no reply affidavit had been filed to dispute these facts. “In our opinion, the onus shifts to the appellant herein to show that the vehicle was not being used in Kerala so as to attract tax under the Taxation statute.”
The Bench recorded that liability under the Motor Vehicles Act accrues with respect to the use of the vehicle in Kerala and referred to a Division Bench decision recognising the power to cancel registration in similar cases.
It concluded that “no valid reasons have been pointed out, warranting interference with reference to the impugned judgment,” and that the additional documents would not assist the appellant, since “when there is no business carried out in Puducherry, why the vehicle was being ‘used there’ is the moot question for which no plausible explanation has been offered.”
The Court recorded that “on a totality of the facts and circumstances noticed as above, we are of the opinion that the proceedings initiated against the appellant herein cannot be found fault with. We are of the opinion that no valid reasons have been pointed out, warranting interference with reference to the impugned judgment of the learned Single Judge.”
“Additional documents produced before us, as noticed earlier, would also not help the appellant since, when there is no business carried out in Puducherry, why the vehicle was being ‘used there’ is the moot question for which no plausible explanation has been offered by the appellant herein. We find no reason to entertain this appeal any further, and the same would stand dismissed.”
Advocates Representing the Parties
For the Appellant: Sri. Manu Vyasan Peter; Sri. P.B. Subramanyan; Sri. Sabu George; Smt. B. Anusree; Smt. Meera P.
For the Respondents: Dr. Thushara James, Senior Government Pleader
Case Title: M/s T P Trading Company vs Transport Commissioner & Others
Neutral Citation: 2025: KER:93944
Case Number: W.A. No. 1403 of 2025
Bench: Justice A. Muhamed Mustaque; Justice Harisankar V. Menon
