JUDGMENT : Sanjeeb K Panigrahi, J. 1. The petitioner, in the present writ petition, challenges the demand notice dated 05.08.1997 issued by the Regional Transport Officer, Mayurbhanj, the appellate order dated 08.10.1999 passed by the Collector, Mayurbhanj, and the revisional order dated 25.02.2010 passed by the Transport Commissioner, Odisha. I. FACTUAL MATRIX OF THE CASE: 2. Succinctly put, the facts of the case are as follows: (i) The Odisha Forest Development Corporation Limited, a Government of Odisha undertaking, owns a tourist bus bearing registration No. OSM- 906, registered with the Regional Transport Officer, Mayurbhanj. The said bus is under the control of the Divisional Manager, Karanjia, and is used for carrying tourists in the Similipal Tiger Reserve. (ii) In the year 1995, the vehicle went out of order and required major repairs. Intimation to that effect was given to the Regional Transport Officer, Baripada, vide letter No. 319 dated 27.01.1995, requesting that the vehicle be kept off the road with effect from 01.02.1995. The original Registration Certificate was also surrendered along with the said letter. (iii) The Divisional Manager, Odisha Forest Development Corporation Limited, Karanjia, addressed a letter bearing No. 1070 dated 05.04.1995 to the Regional Transport Officer, Baripada. Thereafter, a reminder letter bearing No. 2551 dated 08.09.1995 was addressed to the Motor Vehicle Inspector, Baripada, to inspect the vehicle for immediate repair. The said communication was followed by another reminder letter bearing No.2773 dated 11.10.1995. (iv) Subsequently, another letter bearing No. 2948 dated 27.10.1995 was addressed to the Motor Vehicle Inspector along with the estimate of repair obtained from an automobile workshop. This was followed by another communication dated 04.12.1995. Thereafter, the vehicle was inspected on 18.02.1996, and a letter bearing No. 3 dated 20.02.1996 was received from the office of the Regional Transport Officer, Mayurbhanj, certifying the approximate cost of repair and spare parts to be Rs.57,800/-. (v) The Oriental Insurance Company Limited, with whom the vehicle was insured, issued a renewal notice dated 18.01.1996. (vi) However, the vehicle could not be repaired due to financial constraints. Consequently, the Divisional Manager, Karanjia, addressed a letter bearing No. 198 dated 24.01.1997 to the Regional Transport Officer, Mayurbhanj, requesting that the vehicle be kept off the road up to 31.01.1998. The requisite Form-H covering the periods from 01.02.1996 to 31.01.1997 and from 01.02.1997 to 31.01.1998 was also submitted. (vii) The vehicle remained unused continuously with effect from 01.02.1995. Consequently, the Divisional Manager, Karanjia, addressed a letter bearing No. 198 dated 24.01.1997 to the Regional Transport Officer, Mayurbhanj, requesting that the vehicle be kept off the road up to 31.01.1998. The requisite Form-H covering the periods from 01.02.1996 to 31.01.1997 and from 01.02.1997 to 31.01.1998 was also submitted. (vii) The vehicle remained unused continuously with effect from 01.02.1995. The Registration Certificate had been surrendered with the Regional Transport Officer, and the insurance policy was not renewed thereafter. (viii) Subsequently, a communication bearing No. 501 dated 14.02.1997 was received from the Regional Transport Officer, Mayurbhanj, informing the petitioner that the off the road intimation for the period from 01.02.1997 to 31.01.1998 was not accepted on the ground that the earlier off the road period was valid only up to January, 1996, and that tax along with penalty was due for the period from February, 1996 to February, 1997. (ix) Thereafter, the Regional Transport Officer issued a demand notice bearing No. 2778 dated 05.08.1997, demanding a sum of Rs. 3,01,871/- towards motor vehicle tax for the period from February, 1995 to June, 1997. (x) Aggrieved by the said demand, the Corporation preferred an appeal before the Collector-cum-Chairman, Regional Transport Authority, Mayurbhanj, registered as OMVT Appeal Case No. 7 of 1997. In the said proceeding, para-wise comments were submitted by the Regional Transport Officer. The case of the Corporation before the appellate authority was that the off the road intimation was valid for a period of one year under the proviso to Section 10(1) of the Orissa Motor Vehicles Taxation Act, and that the off the road intimation covering the periods from 01.02.1996 to 31.01.1997 and from 01.02.1997 to 31.01.1998 had been submitted on 31.01.1997. It was further contended that the vehicle was inspected earlier by the Motor Vehicle Inspector and was found to require major repairs, and that the estimate for such repairs was approved by the inspecting authority. (xi) The appellate authority rejected the appeal by order dated 08.10.1999 passed in OMVT Appeal Case No. 7 of 1997. (xii) The petitioner thereafter challenged the order passed by the Collector, Mayurbhanj, before the Transport Commissioner, Odisha, Cuttack, by filing M.V. Revision Case No. 3 of 2000. (xi) The appellate authority rejected the appeal by order dated 08.10.1999 passed in OMVT Appeal Case No. 7 of 1997. (xii) The petitioner thereafter challenged the order passed by the Collector, Mayurbhanj, before the Transport Commissioner, Odisha, Cuttack, by filing M.V. Revision Case No. 3 of 2000. (xiii) The Transport Commissioner, while exercising revisional jurisdiction, heard the matter and disposed of the Revision Petition by order dated 25.02.2010, directing the taxing authority to levy the tax due along with 50% of the penalty instead of 200% as earlier demanded. (xiv) Aggrieved by the aforesaid orders, the petitioner has invoked the extraordinary jurisdiction of this Court under Articles 226 and 227 of the Constitution of India. II. SUBMISSIONS ON BEHALF OF THE PETITIONER: 3. Learned counsel for the petitioner earnestly made the following submissions in support of his contentions. (i) The petitioner submitted that liability to pay motor vehicle tax arises only when a vehicle is actually used on the road or kept for use. According to the petitioner, the vehicle in question was neither used nor capable of being used during the relevant period. (ii) The petitioner submitted that the vehicle had gone out of order and required major repairs, which fact stood certified by the Motor Vehicle Inspector. It was contended that a vehicle which is mechanically incapable of being used cannot be deemed to be kept for use. (iii) The petitioner submitted that the Registration Certificate was surrendered and off the road intimations were duly submitted. According to the petitioner, there was no report or material to indicate that the vehicle was used on the road after 01.02.1995. (iv) The petitioner further contended that the deeming provision under Section 10(3) of the Orissa Motor Vehicles Taxation Act creates only a rebuttable presumption, which, according to the petitioner, stood rebutted in the present case. (v) The petitioner submitted that the off the road intimations submitted by the petitioner were not accepted by the Regional Transport Officer without assigning any cogent justification, and tax and penalty were demanded for the entire period. (vi) The petitioner submitted that the penalty imposed under Section 13 of the Orissa Motor Vehicles Taxation Act is arbitrary. It was contended that the penalty was imposed without issuance of notice, without assigning reasons, and without affording any opportunity of hearing, though Section 13(2) mandates such opportunity. (vi) The petitioner submitted that the penalty imposed under Section 13 of the Orissa Motor Vehicles Taxation Act is arbitrary. It was contended that the penalty was imposed without issuance of notice, without assigning reasons, and without affording any opportunity of hearing, though Section 13(2) mandates such opportunity. (vii) It was further submitted that the penalty was imposed to the maximum extent on a technical ground under the deeming provision and not on account of any actual use of the vehicle. (viii) The petitioner submitted that the lower appellate authority rejected the appeal merely by referring to Section 10(3) of the Act without appreciating the grounds raised and the submissions advanced. (ix) It was further submitted that the revisional authority disposed of the revision in a mechanical manner by merely reducing the penalty, without appreciating the purpose of the statutory provisions or examining the legality of the demand itself. (x) According to the petitioner, the demand of tax and penalty is confiscatory in nature. It was submitted that motor vehicle tax is compensatory and is leviable only when the vehicle is used or kept for use. Therefore, the demand notice, the appellate order, and the revisional order are liable to be quashed. III.SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES: 4. Per contra, learned counsel for the opposite Parties earnestly made the following submissions: (i) Section 3 of the Orissa Motor Vehicles Taxation Act, 1975 is the charging provision, which provides that tax shall be levied on every motor vehicle used or kept for use within the State at the rate specified in the Schedule. (ii) It was further submitted that Section 10 of the Orissa Motor Vehicles Taxation Act provides for prior intimation of temporary discontinuance of use of a vehicle. According to the opposite parties, under sub-section (1) of Section 10, the registered owner is required to deliver an undertaking in the prescribed form specifying the period during which the vehicle is not intended to be used, along with the Registration Certificate and other documents, and such undertaking cannot relate to a period exceeding six months at a time. In terms of sub-section (3) of Section 10, in the absence of any undertaking delivered under sub- section (1), every motor vehicle liable to tax shall be deemed to have been used or kept for use within the State. In terms of sub-section (3) of Section 10, in the absence of any undertaking delivered under sub- section (1), every motor vehicle liable to tax shall be deemed to have been used or kept for use within the State. (iii) The appellate authority, namely the Collector, Mayurbhanj has recorded a finding that the vehicle was off the road only till 01.02.1995 and that the appellant had not filed any application for continuance of off the road thereafter, resulting in violation of the provisions of Section 10 of the Orissa Motor Vehicles Taxation Act. It was submitted that the stand taken by the appellant regarding absence of permit, fitness, and detection of plying was held to be of no consequence. (iv) It was further submitted that the Transport Commissioner, Odisha, while exercising revisional jurisdiction in M.V.T.R. No. 3 of 2000, agreed with the findings of the appellate authority insofar as levy of tax is concerned, and reduced the penalty from 200% to 50%. (v) It was submitted that the petitioner admittedly did not submit prior intimation for non-user of the vehicle as required under Section 10 of the Orissa Motor Vehicles Taxation Act, and therefore, in view of sub- section (3) of Section 10, the vehicle is deemed to have been used or kept for use within the State and is liable for tax. (vi) The impugned demand notice is valid and justified, and the writ petition is devoid of merit and liable to be dismissed. IV. COURT’S ANALYSIS AND REASONING 5. Heard learned counsel for the parties and perused the materials placed on record. 6. The primary issue that arises for consideration in the present writ petition is whether motor vehicle tax and penalty could have been levied upon the petitioner for the period in question. 7. It is not in dispute that the vehicle in question went out of order in the year 1995 and required major repairs. A perusal of the record reveals that the petitioner had duly intimated the authorities regarding discontinuance of use of the vehicle, surrendered the Registration Certificate, and repeatedly requested inspection and approval for repairs. The Motor Vehicle Inspector, upon inspection, certified that the vehicle required major repairs and assessed the approximate cost thereof. There is no material placed on record by the opposite parties to indicate that the vehicle was ever used on the road during the relevant period. 8. The Motor Vehicle Inspector, upon inspection, certified that the vehicle required major repairs and assessed the approximate cost thereof. There is no material placed on record by the opposite parties to indicate that the vehicle was ever used on the road during the relevant period. 8. The scheme of the Orissa Motor Vehicles Taxation Act, 1975 makes it clear that motor vehicle tax is compensatory in nature. Under Section 3 of the Act, tax is leviable only on a motor vehicle which is “used or kept for use” within the State. The expression “kept for use” cannot be construed in isolation or in a mechanical manner, but must be understood in the context of the object of the statute, which is to levy tax in respect of vehicles capable of using public roads and thereby availing the facilities maintained by the State. 9. Section 10 of the Act contemplates temporary discontinuance of use of a motor vehicle and requires the registered owner, under sub-section (1), to deliver an undertaking specifying the period during which the vehicle is not intended to be used. Sub-section (3) provides that where no such undertaking is delivered, the motor vehicle shall be deemed to have been used or kept for use within the State. This Court, on a plain reading of Section 10 of the Act, is of the view that the deeming provision under sub-section (3) operates only in the absence of material showing discontinuance of use of the vehicle. Where the record discloses that the vehicle had gone out of order, the Registration Certificate stood surrendered, and the competent authority itself certified that the vehicle required major repairs, the condition precedent for invoking the deeming fiction under Section 10(3) does not stand satisfied. 10. In the present case, the petitioner has rebutted the statutory presumption of use or keeping for use arising under Section 10(3) of the Act. The surrender of the Registration Certificate, the certification by the Motor Vehicle Inspector regarding major repairs, the absence of insurance renewal, and the lack of any allegation or proof of actual plying cumulatively establish that the vehicle was neither used nor capable of being used during the relevant period. The levy of tax founded solely on a technical invocation of Section 10(3), despite such material, therefore cannot be sustained. 11. The levy of tax founded solely on a technical invocation of Section 10(3), despite such material, therefore cannot be sustained. 11. The manner in which the appellate and revisional authorities dealt with the matter also cannot be sustained. The appellate authority rejected the appeal by merely invoking the deeming provision under Section 10(3) of the Act, without addressing the specific grounds raised by the petitioner relating to non-user and mechanical incapacity of the vehicle. The revisional authority, while reducing the quantum of penalty from 200% to 50%, confined itself to the issue of penalty and failed to examine the legality of the tax demand itself. Such mechanical affirmation of the demand, without independent application of mind to the relevant facts and the statutory scheme, vitiates the impugned orders. 12. The levy of penalty under Section 13 of the Act is equally unsustainable. Penalty entails serious consequences and can be imposed only upon strict compliance with the requirements of natural justice. In the present case, the record does not disclose issuance of any notice, grant of opportunity of hearing, or recording of reasons as mandated under Section 13(2) of the Act. The subsequent reduction of penalty by the revisional authority further underscores the arbitrariness of the original imposition. 13. This Court is mindful of the fact that statutory provisions are required to be complied with. At the same time, procedural requirements cannot be applied in a manner that defeats substantive justice, particularly where the material on record unmistakably establishes that the vehicle was neither used nor was it capable of being used. A tax statute, being compensatory in nature, cannot be enforced so as to render the levy punitive or confiscatory in the absence of use or keeping for use. V. CONCLUSION: 14. In view of the aforesaid discussion, this Court is of the considered view that the demand of motor vehicle tax and penalty for the period in question is unsustainable in law and on facts. The impugned demand notice dated 05.08.1997, the appellate order dated 08.10.1999, and the revisional order dated 25.02.2010 cannot be allowed to stand. 15. Accordingly, the Writ Petition is allowed. The impugned demand notice dated 05.08.1997 issued by the Regional Transport Officer, Mayurbhanj, the appellate order dated 08.10.1999 passed by the Collector, Mayurbhanj, and the revisional order dated 25.02.2010 passed by the Transport Commissioner, Odisha, are hereby quashed. 15. Accordingly, the Writ Petition is allowed. The impugned demand notice dated 05.08.1997 issued by the Regional Transport Officer, Mayurbhanj, the appellate order dated 08.10.1999 passed by the Collector, Mayurbhanj, and the revisional order dated 25.02.2010 passed by the Transport Commissioner, Odisha, are hereby quashed. There shall be no order as to costs. 16. Interim order, if any, passed earlier stands vacated.