Dileep Kumar Upadhyay Vs State of Up And 3 Others (Allahabad High Court)
In Dileep Kumar Upadhyay vs. State of Uttar Pradesh & Others, the Allahabad High Court quashed a tax recovery citation issued against the petitioner for unpaid motor vehicle tax. The petitioner argued that after defaulting on a loan, his vehicle, a Tata Magic, was seized by Hinduja Leyland Finance Limited in 2013. Following the seizure, the vehicle was sold, and the petitioner no longer had possession of it. He contended that he had paid all taxes up until the vehicle was repossessed and that the liability for further taxes should fall on the financier, not him. The petitioner supported his argument by citing the Supreme Court’s ruling in Mahindra and Mahindra Financial Services Ltd. vs. State of U.P., which states that the financier becomes liable for tax once they take possession of the vehicle.
The State argued that the petitioner failed to notify the Taxation Officer about the seizure, as required by Rule 18 of the U.P. Motor Vehicles Taxation Rules, 1998. Despite this, the court found merit in the petitioner’s submission. The court held that under the Supreme Court’s judgment, the financier, after taking possession of the vehicle, bears the responsibility for paying the tax. Therefore, the liability for any tax post-seizure should not fall on the petitioner. The court directed that the petitioner’s objections be considered by the competent authority and quashed the tax recovery citation. However, any unpaid tax for the period before the vehicle’s seizure remained the petitioner’s responsibility.
