Financier must pay tax on seizure of mortgaged commercial vehicle: Supreme Court | India News

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NEW DELHI: The Supreme Court has ruled that if a financier takes possession of a mortgaged commercial vehicle for loan default, then the financier, not the owner of the vehicle, would be liable to pay a tax advance under the Act on motor vehicle taxation.
A panel of Judges MR Shah and BV Nagarathna delivered the verdict dismissing an appeal by Mahindra and Mahindra Financial Services, who had argued that although he had taken possession of the commercial vehicle in the event of loan default, for all purposes useful, the commercial vehicle remained registered in the name of the owner and he alone should be responsible for paying the tax under the law.
Writing the judgment, Judge Shah said that a financier like the appellant, who is in possession of the transport vehicle in question because of non-payment of the amount of the loan, is an “owner” under the relevant provisions of the law.
Under the law on commercial or transport vehicles, the tax must be paid in advance as a monthly tax or an annual tax and only after this payment can the vehicle be put into service. The law also provided that if after payment of the advance tax, the transport vehicle was not used for a continuous period of one month or more since the last payment of the tax, the owner could apply for reimbursement.
The board ruled that “the lessor of a motor vehicle/transport vehicle for which a hire-purchase or leasing or pledge agreement has been concluded, is liable to (pay) the tax from the date of taking possession of said vehicle under the If, ​​after payment of the tax, the vehicle is not used for a month or more, then such owner may apply for a refund.”
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