C.N. Ramachandran Nair, J.
1. The petitioner is challenging Exts. P1 and P5 orders by which entry tax and penalty thereon are demanded for purchase and import from outside the State of a Tower Wagon and Tree Trimming Vehicle, a Foam Tender and a Dry Chemical Powder Tender vehicle. While the case of the petitioner is that none of the three items fall within the description of 'motor vehicle' as defined under Section 2(j) of the Entry Tax Act read with Section 2(28) of the Motor Vehicles Act the case of the respondents is that all the three vehicles are motor vehicles of Tata make, though equipped with machinery and fittings for tree trimming and repair of electric line at high altitude and for fire fighting and therefore, entry tax was payable. Having failed to file the returns and pay the tax, the petitioner was assessed for tax and penalty is the case of the respondents.
2. In order to appreciate various contentions, the nature and function of the various items have to be gone into. The petitioner has produced photographs of all the three items marked as Exts.P2, P3 and P4 and it is clear from the same that all the three are essentially trucks of Tata make fitted with various equipments. The first item called Tower Wagon and Tree Trimming Vehicle is nothing but a truck fitted with a lifting mechanism which enables people to stand in a cabin and cut tree branches at heights or to repair electrical line or to do Work at high elevation. The equipment can be lifted to fairly good heights for cutting branches or attending to service or repairs at high elevation. Similarly the other two are Tata trucks fitted with fire fighting equipments, one using Foam and the other using Dry Chemical Powder. The fire tenders have sufficiently big cabins to accommodate some fire fighting personnel besides the crew members.
3. Even though counsel for the petitioner contended that these three items do not come within the definition of 'motor vehicle' under the definition clause, I do not find the argument tenable. The Entry Tax Act adopts the definition of 'motor vehicle' from Section 2(28) of the Motor Vehicles Act, 1988 which reads as under:
'Motor Vehicle' means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer, but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises.
The contention of the counsel is that the items though apparently 'motor vehicles', fall within the exclusion clause of the definition because the vehicles are of a special type adopted for use only in a factory or in any other enclosed premises. It is seen from the photographs produced that the vehicles are ordinary Tata trucks fitted with the equipments referred above. Fire tenders are normally operated on road and are nothing but trucks fitted with fire fighting equipments with storage facility; whether it is chemical or water. The size and dimensions of the fire fighting equipments do not make it anyway abnormal affecting it's use on roads. The third item namely, Tower Wagon and Tree Trimming Vehicle also can be used even on the road because even though the attachment to it is high, it can be folded and height reduced within reasonable limits for use on road. It is to be noted that the Motor Vehicles Taxation Act provides specific entry for levy of tax under item 10 of the Schedule to the Act for fire engine, fire tenders, road water Sprinklers, cranes and Earth moving vehicles such as dumpers, bulldozers etc. In the circumstances, all the three items are motor vehicles and the argument to the contrary is therefore rejected.
4. Counsel for the petitioner also submitted that even if the items which are subject to entry tax and penalty are motor vehicles, the petitioner has not brought the vehicles for use as such or for sale to attract entry tax under Section 3 of the Act. According to him, the use of the vehicle is only incidental and the purpose of the vehicle is to make the equipments mobile. Even though use of the vehicle is for transporting the equipment or the fire fighting system for use at the required site, there is certainly use of the vehicle without which service of the equipments cannot be made available at the required sites. Section 3 does not stipulate that in order to attract entry tax, the vehicle should be used only for transport of passengers and goods. Even incidental use of the vehicle for transport of a machinery or equipment fitted thereon is certainly use that attracts tax. In other words, every form of use of the vehicle attracts entry tax and it cannot be said that vehicle attracts entry tax only if it is used for it's traditional use of transport of passengers or goods. Therefore, this contention is also rejected.
5. The next contention raised by counsel for the petitioner is that petitioner is a Central Government undertaking and so much so, tax cannot be demanded in respect of the motor vehicle as provided under second proviso to Section 3(1) of the Entry Tax Act. I find the exemption provided under the above refferred proviso is only for the property of Central Government and for items used exclusively for the purpose relating to defence of India. The petitioner is only a public sector undertaking and the benefit of exemption provided under the proviso does not extent to property of public sector undertakings. The petitioner is only engaged in generation and distribution of electricity from thermal power and it is not engaged in any operations relating to defence of India. Therefore, the claim of exemption under second proviso to the charging section is untenable and hence rejected.
6. The last contention raised is against the determination of purchase value based on which entry tax and penalty are demanded. The impugned orders do not contain the basis on which purchase value is taken at the uniform rate of Rs. 8 lakhs for each of the three vehicles. If it is only the value of the truck excluding the fittings thereon, then of course the levy of tax is tenable. However, if the value taken includes the value of machinery and equipments fitted thereon, then I feel the assessment and levy of penalty on such excess value over the value of the truck chassis is not justified. The purchase value under Section 2(n) of the Entry Tax Act is as follows:
'Purchase value' means the value of the goods, as ascertained from the original invoice and includes insurance, excise duties, countervailing duties, sales tax, transport fee, freight charges and all other charges incidentally levied on the purchase of the goods and in the case of a motor vehicle includes the value of accessories fitted to the vehicle;.
It is clear from the above clause that so far as value of motor vehicle is concerned, what can be included in addition to it's normal value is the value of accessories. Accessories are nothing but additional fittings contributing to better or more comfortable use of the vehicle. The equipments fitted to the three vehicles involved are not accessories but are independent machinery designed for specific purpose which have nothing to do with normal use of the vehicle. In fact those machinery and equipments are independently usable and those are attached to vehicles only to make it mobile and the purpose of the vehicle is essentially to transport the equipments for making the service mobile and to reach it at the required site. Since the attachments are not accessories, there is no scope for adding the value of machinery and equipments to the purchase value for the purpose of assessment and demand of entry tax. On the whole, I feel the value of everything except the chassis and the cabin should be deleted from the invoice produced for arriving at purchase value for assessment. The proviso to Section 2(n) also authorises estimation of market value for the purpose of assessment wherever value cannot be determined otherwise.
7. In the circumstances, though the assessment and demand of entry tax in respect of the three vehicles vide Ext.P1 is tenable, it requires modification to the extent indicated above. The first respondent is directed to verify the invoices and records and to see whether assessment is only on the value of the chassis including the value of the cabin and if not, to limit the assessment on purchase value of the chassis and the cabin. In other words, to determine the tax by excluding the value of entire equipments and fittings.
8. So far as penalty is concerned, I feel this is not a fit case to levy penalty because petitioner is a Central Government undertaking which contested the demand on the bonafide belief that the equipments are not ordinary motor vehicles to be subjected to tax. Having regard to the peculiar features of the vehicles, I feel the dispute raised is bonafide. Moreover, it is to be noted that the two fire tenders are not even registered under the Motor Vehicles Act which I feel is against the Motor Vehicles Act and Rules. Those vehicles are bound to be registered because there is every chance of its being taken out of the factory atleast to meet the requirement of public in the event of fire in any neighbouring area. Being a public sector undertaking the company is bound to provide service of the fire tenders at the call of any public authority to render assistance even outside the factory premises. In the circumstances, the vehicles are liable to be registered and petitioner is directed to take registration under the Motor Vehicles Act for the two fire tenders. Since no coercive steps are taken by the Motor Vehicles Department for registration, the RTO concerned is directed to register the vehicles without levying any penal charges. In view of the bonafide dispute and since petitioner was not called upon to register even the two fire tenders under the Motor Vehicles Act the levy of penalty under Entry Tax Act is not sustainable. In the circumstances, Ext.PS is quashed. However, first respondent is directed to issue fresh demand of tax and interest in accordance with the above directions within a period of three weeks from the date of production of copy of this judgment by the petitioner. The petitioner is also directed to register the two fire tenders under the Motor Vehicles Act within a period of one month from now.