No Equity In Taxation Law: Himachal Pradesh High Court On Tax Liability Of Auction Purchaser

Himachal Pradesh High Court held that an auction Purchaser is liable to pay the outstanding taxes on vehicles acquired through auction. It stated that there is no equity in taxation law and equity would only come into play in case there is no law operating in the field.Justice Tarlok Singh Chauhan & Justice Sushil Kukreja: “It is more than settled that there is no equity in taxation law and further more equity would only come into play in case there is no law operating in the field. Here, there is already law operating in the field and therefore, equity has to yield before law. For, it is well settled that whenever conflict is between the law and equity, law would prevail”. Background Facts:The Department of Excise and Taxation, during a search and seizure operation related to tax invasion, confiscated several vehicles belonging to M/s Indian Techno Mac Company Ltd. These vehicles, along with other assets, were subsequently auctioned through an auction-cum-tender notice, on the basis of “as is where is”, “as is what is” and “whatever there is”. The petitioner, Arif khan, was declared as the successful bidder and purchased multiple vehicles. Among them, 10 vehicles were registered in the name of State of Himachal Pradesh.However, when the petitioner applied for transfer of registration in his name he was informed that taxes of the vehicles had been unpaid for the past eight years. He was told that unless the taxes are cleared, the registration certificates of those vehicles could not be transferred in his name. Being aggrieved by this, the petitioner filed the writ petition seeking exemption from all pending taxes related to the vehicles purchased through auction. Contentions:The petitioner contended that under Section 14 of the Himachal Pradesh Motor Vehicles Taxation Act, 1972, the State Government is empowered to grant an exemption form tax if the registered owner or person in control of the vehicle provides prior written intimation to the taxation authority stating that the vehicle would not be used in any public place.He further submitted that vehicles were in possession of Excise and Taxation Department prior to auction, it was the Department's responsibility to have filed the required intimation. The petitioner further stated that he was being unfairly burdened with a substantial tax liability through no fault of his own.Findings:The Court remarked that under section 9 of the Himachal Pradesh Motor Vehicles Taxation Act, if the person liable to pay tax transfers ownership without clearing the dues, the liability to pay tax passes to the new owner.The Court clarified that exemption under Section 14 of the Himachal Pradesh Motor Vehicles Taxation Act, can only be granted if the registered owner or person in control of the vehicle had given prior written intimation that the vehicle would not be used in a public place. In this case, neither the registered owner nor the petitioner had submitted any such intimation.It further noticed that as per the brochure of auction-cum-tender it was for the successful bidder to pay GST, TDS, levies, duties taxes and cesses including registration charges, stamp duty, etc. as were applicable, over and above the approved bid amount.Regarding the plea of equity, the court stated that there is no equity in taxation law and further more equity would only come into play in case there is no law operating in the field. The court remarked that when there is already law operating in the field, equity has to yield before law. For, it is well settled that whenever conflict is between the law and equity, law would prevail. Thus, the court dismissed the writ petition and directed the petitioner to comply with the tax liability and pay the tax due with respect to the vehicle purchased. Case Name: Arif Khan v/s State of H.P. & Ors. Case No.: CWP No.1948 of 2024Date of Decision: 15.05.2025For the Petitioner: Mr. Rajiv Rai, Advocate. For the Respondents: Mr. Anup Rattan, A.G. with Mr. I.N.Mehta, Sr. Addl. A.G. Mr. Ramakant Sharma, Mr. Navlesh Verma, Ms. Sharmila Patial, Mr. Sushant Kaprate, Addl. A.Gs. and Mr. Raj Negi, Dy.A.G. for respondents/State.Click Here To Read/Download Order

No Equity In Taxation Law: Himachal Pradesh High Court On Tax Liability Of Auction Purchaser

Mehak Aggarwal

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Mehak Aggarwal

No Equity In Taxation Law: Himachal Pradesh High Court On Tax Liability Of Auction Purchaser

Mehak Aggarwal

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INR 1099+GST

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Mehak Aggarwal

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