Uttar Pradesh Motor Vehicle Taxation Act: Supreme Court said – financier is liable to tax on taking possession of the transport vehicle under the law

New Delhi: The Supreme Court on Tuesday held that the financier of a transport vehicle, for which a lease or mortgage agreement has been entered into, is liable to tax under the Uttar Pradesh Motor Vehicle Taxation Act 1997 from the date of taking possession of the vehicle.

The top court refused to interfere with the December 2019 judgment of the Allahabad High Court. The High Court in its judgment had held that the financier of a transport vehicle is liable to pay tax after taking possession of the vehicle under the 1997 Act.

A bench of Justices Mr. Shah and BV Nagarathna dismissed the appeal filed by the financier who granted the loan for the purchase of the vehicle against the High Court's decision. The top court said that if the vehicle was not used for a month or more after payment of tax, the owner of the vehicle can apply for a refund under section 12 of the 1997 Act, but the provision for seeking refund All the conditions mentioned in the above shall be complied with.

The bench, in its judgment, said that the financier had given a loan for the purchase of a transport vehicle and had taken possession of the vehicle in default of payment of the loan. Referring to the provisions of the UP Motor Vehicles Act of 1997 and the 1988 Act, the bench held that a financier, who has taken possession of the vehicle due to non-payment of the loan, is its 'owner'.