In the event of vehicle repossessed by the financer on account of non-payment of EMI’s, it would be financier’s liability to pay the tax liability towards road tax and penalty, as applicable.
Allahabad High Court has held that in the event of vehicle repossessed by the financer on account of non-payment of EMI’s, it would be financier’s liability to pay the tax liability towards road tax and penalty, as applicable.
Section-2(h) of the Motor Vehicle Taxation Act, 1997 defines “owner” in respect of a motor vehicle would mean a person whose name is entered in the certificate of registration and where the vehicle is hypotheticated the owner would be a person who is in possession of the vehicle.
In the instant case, the Petitioner challenging the demand was treated as a registered owner till the date of re-possession of the vehicle by the finance company. Thereafter i.e. once the vehicle is re-possessed by the finance company, the agreement of the hypothecation stands terminated unless contrary is established by the finance company, and from that date i.e. the date of re-possession, the liability falls upon the finance company who becomes the owner in possession of the vehicle. The financier is also required to inform the Regional Transport Officer that the vehicle has been re-possessed.
The petitioner in the instant case was held liable to pay road tax upto the period of repossession and thereafter the finance company was held liable to pay the road tax and the demand note should accordingly be made.
[Manish Mukhriya vs. State of Uttar Pradesh & Ors.]
(Allahabad HC, 02.02.2015)
(Writ Tax No. 92 of 2015)