1. The order will dispose of three petitions bearing WP(C) Nos. 1140, 1141 and 1093/2020. The facts are being taken from SWP No. 1140/2020. The petitioner has approached this Court praying for quashing of order dated 22.06.2020, whereby the petitioners have been directed to deposit differential amount of token tax/fees of the vehicles sold by it from 01.08.2019 to 26.11.2019.

2. Learned counsel for the petitioner submitted that the petitioner is a company registered under the Companies Act, 1956. It is authorized dealer of Hyundai Motors Private Limited. In the regular course of business it is selling the Automobile Products manufactured by Hyundai Motors Private Limited.

3. The petitioner charges the cost value of the vehicle and the taxes levied thereon. Registration of vehicles is the responsibility of the buyer and so the payment of tax. Vide SRO 492 dated 01.08.2019, issued by the Transport Department in exercise of powers conferred under section 3 of the J&K Motor Vehicles Taxation Act, 1957 (for short ‘the 1957 Act’), registration fee on the vehicles was increased. As against the earlier system of payment of registration fee on annual basis, one time ad-valorem tax was levied. Prior to that, vide communication dated 12.10.2017, issued by the Transport Department, dealer assisted system for registration of vehicles was introduced. The idea was to facilitate the buyers of the vehicles, check delays and errors, and reduce their harassment. In terms of the aforesaid scheme, a buyer of the vehicle was required to deposit the registration fee with the dealer selling the vehicle, who in turn was to deposit the same with the Transport Department online on Vahaan Portal. After the increase of the token tax under the 1957 Act, the petitioner continued collecting that amount from the buyers, on the cost of the vehicles and deposit the same with the Department. As principally no tax on tax can be levied, the amount of ad- valorem registration fee was calculated on the price of the vehicle excluding the GST portion thereof. The same was deposited with the treasury online and the details were uploaded on the Vahaan Portal. There was no objection raised. The system was followed like this till such time a clarification was issued by the Transport Department vide Government Order dated 26.11.2019, clarifying that the token tax has to be calculated on the basic cost plus GST. After the issuance of the aforesaid clarification as the petitioner was not to pay the tax from its own pocket and it is the responsibility of the buyer of the vehicle, the petitioner started following that system. More than six months thereafter, a communication dated 22.06.2020, was received from the respondent No.3/Regional Transport Officer Transport Nagar, Jammu, directing the petitioner to deposit the differential tax for the period from 01.08.2019 to 25.11.2019. It was difference of registration fees on the amount of GST, which earlier was not included in the cost price of the vehicle for the purpose of calculation of tken tax.

4. In the aforesaid factual matrix, the contentions raised by learned counsel for the petitioner is that vide impugned clarification dated 26.11.2019, new words have been added in SRO 492 dated 01.08.2019, for which there was no jurisdiction vested with the authority issuing the clarification. He further submitted that in effect the clarification issued by the department has put liability on the petitioner with retrospective effect even though, the basic liability to pay token tax is not of the petitioner. Notice issued is totally without jurisdiction. The details of the buyers of the vehicles are available with the Transport Department. In case, the department has any demand on that account, the buyers of the vehicles could have been asked to deposit the differential tax. This is in terms of scheme of the 1957 Act, if seen in the light of the section 4 thereof. He further submitted that if calculation of token tax was not proper when it was uploaded on the Vahaan Portal, the registration could have been refused. But it was not so, as registration in all these cases was approved on deposit of the amount of tax, hence, it is too late to raise this issue.

5. Mr. Sheikh Shakeel Ahmed, learned counsel appearing for the petitioners in WP(C) No. 1093/2020, submitted that the aforesaid clarification was issued in reply to the query raised by the transporters. In fact, the department did not want to enter into any issue on that. Otherwise, he adopted the arguments raised by Mr. Vishal Goel, Advocate.

6. In response, learned counsel for the respondents submitted that vide SRO 492 dated 01.08.2019, one time ad-valorem token tax was proposed to be charged for registration of vehicles. The liability was of the dealer to collect the same and deposit with the department. The system of temporary registration was done away with. As the SRO 492 was uploaded on the website on 03.08.2019, the department accepted tax at old rates up to 03.08.2019. The cost of the vehicle will always include the actual cost to the buyer. It was the responsibility of the petitioner to have calculated proper tax. As it has violated the mandate of SRO 492, it is liable to pay the differential tax. Vide clarification nothing new has been added. It is simple clarification, which will relate back to the date of basic notification.

7. Heard learned counsel for the parties and perused the relevant referred record.

8. For the sake of reference, the relevant provision of Section 4 of the J&K Motor Vehicles Taxation Act, 1957 is reproduced as hereunder :

“4. Payment of tax and issue of token. –

(1) (a) The tax levied in pursuance of a notification issued under sub-section (1) of section 3 shall be paid by the registered owner or person having possession or control of the motor vehicle, at his choice, either quarterly, half yearly, or annually, upon a quarterly, half-yearly or annual token to be taken out by him.”

9. A perusal of the aforesaid provision of the Act shows that the liability to pay the tax is on the registered owner or the person who has the possession of the vehicle and not that of the seller of the vehicle.

10. Some of the basic facts, which are not in dispute in the present bunch of petitions, are that in the Union Territory of Jammu and Kashmir system for levy of tax for use of motor vehicles on public roads was revised vide SRO 492 dated 01.08.2019. In super session to the earlier rates, this notification provided for payment of one time tax, at the rates specified in the notification. It was payable ad-valorem on the cost of the vehicle. Section 4 of the 1957 Act, provides that liability to pay the aforesaid tax is on the buyer of the vehicle, who has to ultimately use the vehicle on the road. Vide order dated 12.10.2017, (Annexure-B) with objections filed in WP(C) No. 1093/2020, an order was issued by the Transport Department on the subject ‘Dealer Assisted Registration Process’ for non commercial vehicles effective from 01.11.2017. The aforesaid order provides that for the convenience of general public, registration of fresh non-commercial vehicles shall mandatorily be assisted through authorized dealers. The invoice of the vehicle shall be generated by the dealers on Vahaan Portal. All fees and taxes are to be deposited by the buyer of the vehicle with the dealer who in turn will make online payment on the Vahaan Portal. No more temporary registration numbers were to be issued. In view of the change in the scheme for calculation of token tax for registration of vehicles in Jammu and Kashmir and with the introduction of new rates of tax vide SRO 492 dated 01.08.2019, the petitioner started collecting the amount of tax on the cost of vehicle from the buyers thereof and make online deposit on the Vahaan Portal. The amount of ad-valorem tax was being calculated on the cost of vehicle excluding the GST charged thereon.

11. The registration of the vehicle or payment of token tax was not rejected on the Portal as for all the vehicles registration certificates were issued. All of a sudden, the petitioner received a communication dated 22.06.2020, from the Transport Department directing it to deposit differential amount of token tax of the vehicles sold after issuance of SRO 492 dated 01.08.2019. It was the difference of tax on the amount of GST levied on sale of vehicle, on which the token tax was not charged earlier. It was with reference to the clarification issued by the Transport Department on 26.11.2019, which provided that the token tax/ road tax is to be levied on the aggregate cost of the vehicle which includes basic cost plus GST. It could not be disputed that the liability to pay the aforesaid tax is on the buyer of the vehicle who has to utilize the same on the public roads. The fault cannot be attributed to the petitioner for the reason that even the invoice was to be generated from the Vahaan Portal as per the Government Order dated 12.10.2017. Once, the invoice itself is to be generated from the Vahaan Portal that would contain as to how taxes are to be calculated. Hence, to state that it is a fault attributed to the petitioner would not be reasonable as the authorities themselves were not clear about the same and accepted the amount of token tax on the cost of the vehicles excluding GST. As the liability to pay this tax was on the buyer of the vehicle, the petitioners were just to collect the same from the buyer and deposit online. The petitioners were not to be benefitted by saving this tax. Clarification was issued only when some transporters sought to raise issue with the Transport Department. On examination thereof, the department issued the clarification on 26.11.2019. It is not in dispute that after the issuance of the aforesaid clarification the token tax is being calculated on the value of the vehicle including the amount of GST. Any clarification issued by the department to a notification cannot have retrospective effect.

12. For the reasons mentioned above, we find merit in the present petitions. The same are allowed. The impugned notices directing the petitioner to deposit the differential amount of tax for the period from 03.08.2019 to 26.11.2019, are set aside.

13. The writ petitions are disposed of, accordingly.