Telangana: Life tax on ex-showroom price of cars goes

High Court finds plea of Hyderabad resident against RTA's life tax rule justified.

Hyderabad: In a ruling that will benefit vehicle buyers, the Telangana High Court has turned down the Road Transport Authority (RTA)’s justification to impose life tax on the ex-showroom price of the vehicle.

During registration of a new vehicle, the RTA was found to be imposing life tax on the ex-showroom price and not the net invoice price (price after discount). Aggrieved buyers went to court, which upheld their contention.

The case dates back to May 2018, when a Hyderabad resident dragged the RTA to the lower court for charging him Rs 51,000 extra as life tax. The petitioner, Mr Kishore Rai, alleged that the RTA illegally levied life tax of Rs 51,000 at the time of registering his Volvo XC 60 D5 bought from Talwar Cars Pvt Ltd, Hyderabad.

He bought the car for Rs 52.9 lakh (after discount) but the RTA levied the tax on the ex-showroom price of Rs 55.9 lakh. Mr Rai ended up paying Rs 51,000 extra.

The petitioner claimed that the RTA has been collecting the difference in life tax (between ex-showroom price and invoice price) from customers at the time of permanent registration of the vehicle. According to the Motor Vehicle Act, life tax is to be collected on the invoice price and not on the printed ex-showroom price. Most customers take discounts and so the invoice is made only after discounts are deducted. The single judge in the lower court observed that the life tax must be collected on the final discounted price.

Following this, the state transport authority filed a writ petition in the Hyderabad High Court. Calling it devoid of merit, the High Court dismissed the writ petition.

The High Court, upholding the ruling of the single judge, said, “Life tax is to be collected upon the sale based on the net invoice price and not on the ex-showroom price. As levied only on the cost of the vehicle under 6th schedule to the AP Motor Vehicle Act 1963, unless the contrary is carved out by way of notification in that behalf. In the absence of any notification, life tax can be levied only on the cost of the vehicle (in general parlance, the cost of the vehicle is the amount actually paid by the purchaser to the dealer and it is the consideration for the transfer of a vehicle from the dealer to the purchaser).

( Source : Deccan Chronicle. )
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