Judgment:
ORDER
1. The petitioner is a public sector undertaking and the registered owner of a power tiller bearing Registration No. 7334. The tiller was exempted from the payment of tax under the Karnataka Motor Vehicles Taxation Act, 1957 from the date of its Registration in April, 1971. More than 17 years later, the Assistant Regional Transport Officer, Bangalore, issued a Demand Notice calling upon the petitioner to pay a sum of Rs. 10,657-50 representing tax due under the Act for the period 1-4-1971 to 30th of September, 1988. The notice justified the demand on the ground that the petitioner was not solelydependent upon agricultural income which was according to the respondent an essential condition for an exemption under Section 16(3) of the Taxation Act, read with Rule 85-B of the Karnataka Motor Vehicles Rules, 1963 introduced by the Karnataka Motor Vehicles Rules 1963 introduced by the Karnataka Motor Vehicles (6th Amendment) Rules, 1983. Aggrieved, the petitioner has questioned the validity of the demand in the present proceedings.
2. Smt. Sangeetha, Counsel for the petitioner raised a short point in support of the petition. She urged that Section 16(3) of the Karnataka Motor Vehicles Taxation Act, exempted from payment of tax motor vehicles designed and used for carrying out such agricultural operations, as may be prescribed. The agricultural operations prescribed for purposes of Section 16(3) are found in Rule 36 of the Motor Vehicles Taxation Rules, 1957 which was on the statute book during the relevant period although omitted from the same with effect from December, 1987. Rule 36, it was contended, did not nor did Section 16(3), make dependence of the owner of the motor vehicles on agricultural income, as one of the conditions for the grant of exemption from payment of tax. It was urged that the respondent had erroneously read the requirements of Rule 85-B of the Karnataka Motor Vehicles Rules, 1963 as a condition of eligibility for grant of exemption under the Motor Vehicles Taxation Act. There is considerable merits in these submissions. Section 16(3) exempts from payment of tax on motor vehicles which are designed and used solely for carrying out the prescribed agricultural operations. Rule 36 prescribes the agricultural operations that qualify for exemption under Section 16(3) and includes operations such as tilling, sowing, weeding, harvesting, crushing of agricultural produce, reclamation and levelling of the land for agriculture, transportation of persons, materials and manure to the agricultural farm, solely for the purpose of agricultural and transportation of agricultural produce from the agricultural farm to the house of the owner, From a reading of Section 16(3) read with Rule 36 of the rules framed thereunder, it is apparent that the dependence of the owner of the motor vehicle upon income drawn out of agricultural pursuits, is not one of the requirements for thegrant of exemption from payment of tax under the Act. The respondent appears to be conscious of this position for he has referred to Rule 85-B of the Karnataka Motor Vehicles Rules, 1963 in support of the view taken by it that such dependence is an essential condition. Rule 85-B, may at this stage be extracted:
'85-B. Special provision relating to power tiller-trailer.--Notwithstanding anything contained in Rules 56, 78, 120 or any other rule in these rules, in respect of an agricultural power tiller-trailer in lieu of all fees payable under these rules, there shall be Rs. 75/- at the time of initial registration thereof. No other fee shall be payable in respect of any agricultural power tiller-trailer under these rules.
Note.--For the purpose of this rule 'power Tiller-Trailer' means a power tiller-trailer used exclusively for agricultural purpose and the registered owner of which is an agriculturist whose main source of income is from agriculture'.
A plain reading of the above would show that the Rule 85-B envisages the payment of a consolidated payment of Rs. 75/- at the time of initial registration of a power tiller-trailer in lieu of all fees payable under the said rules and exempts all such agricultural power tillers and trailers, from payment of all other fees under the rules. The Note appended to Rule 85-B explains the expression 'power tiller-trailer' to mean a tiller-trailer used exclusively for agricultural purpose, the registered owner of which is an agriculturist whose main source of income is from agriculture. It is obvious that note appended to Rule 85-B is an explanatory provision made only for purposes of explaining the expression 'power tiller-trailer' as it appears in Rule 85-B. The said definition or explanatory provision cannot be extended to or incorporated in Rule 36 of the rules made under the Motor Vehicles Taxation Act nor is there any justification for reading by adoption or incorporating any such provision contained in the rules made under a different enactment. The respondent was therefore clearly in error in having treated Rule 85-B of the Motor Vehicles Rules as a part and parcel of the scheme underlying Section 16(3) of the Motor Vehicles Taxation Act, 1957 read with Rule 36 of the rules framed thereunder. Thequestion of the petitioner/owner being solely dependent on agricultural income so as to qualify for the grant of exemption under Section 16(3) therefore did not arise. The Notice is in these circumstances, clearly unsustainable. I may however hasten to add that the provisions of Section 16(3) envisage grant of exemption from payment of tax under the Act only in respect of motor vehicles that are designed and used solely for carrying out the prescribed agricultural operations. It is not the case of the respondent that the power tiller owned by the petitioner is being used for purposes other than carrying out agricultural operations, but should the respondent propose to set up any such case, it shall be entitled to do so, and raise a demand on that basis provided it grants to the petitioner a reasonable opportunity of being heard in the matter before determining its liability. I was in fact inclined to treat the demand notice as a show-cause notice leaving it open to the respondent to raise a proper demand should it come to the conclusion that power tiller owned by the petitioner was not being used solely for carrying out agricultural operations but I am dissuaded from doing so by the fact that the demand notice does not make any allegation to that effect. The demand notice, as pointed out earlier is based entirely on the assumption that the requirements of Rule 85-B of the Karnataka Motor Vehicles Rules, 1963 are applicable even for purposes of exemptions under the Motor Vehicles Taxation Act, a view which is in my opinion erroneous and has accordingly been rejected in the foregoing paragraphs.
3. In the result, this petition succeeds and is hereby allowed. The impugned demand notice is quashed, reserving liberty for the respondent as indicated above, to raise a fresh demand should it be so advised to do in accordance with law after affording to the petitioner a reasonable opportunity of being heard in the matter.
4. In the circumstances there shall be no orders as to costs.