[iambasilmathew]

2. The next moot point would be see if Karnataka has made any modifications to its taxation act, which is against/contradicts a similar provision in the Central acts.

@SachinPK: Although I do not really agree with you on your thoughts regarding the LTT issue(on grounds of being fair and just), I cannot ignore the logic and the legal proofs that you are providing.

I have a question regarding the point 2 from your earlier argument. Can we not argue that changing the mandatory period of stay from 11 months(as provided by the Central Act for registering in the new state) to one month(although not for registration but for the paying the LTT) in the Karnataka MV act a blatant misrepresentation of the Central Act. When I read the Central Act some 6-7 months before, I was under the impression that there is a section in Central Act which says that LTT needs to be paid only at the time of registration(Ofcourse I could be wrong, Have you see this yourself?). If this is true, can we not say that Karnataka has made modifications to its taxation act, which is against/contradicts a similar provision in the Central acts.

What are you thoughts? Please correct me if I am wrong.

[Chetan_Rao]

How about making a vehicle owner pay LTT in the state of registration of choice (provided residency can be proven) AND pro-rated tax (based on duration of stay) in every other State/UT the car stays in, with probably a minimum specified tax duration limit (say 6 months)?

That way, even if someone intentionally registers a car in a cheaper tax State/UT (like PY), they still have to pay up usage-based tax in other states they stay in. The RTO gets its revenue, and the end user gets a fair(er) deal.

Either way, the system needs to be fair to both sides, the tax payee and the tax collector. I don't appreciate tax evaders, but also abhor losing my hard-earned money for no reason (I re-registered my car in KA and applied for a refund in MP in 2010/11, never saw a penny of it) except lax regulations and impossibly convoluted processes. And NO, I don't accept the 'some process exists' argument. The refund process has to be as prompt and as efficient as the collection process. Plenty of people would pay up voluntarily.


P.S. Actually thinking about it for a sec, I never understood the need for a manual refund request at all. From what I gathered during my car's re-registration process, the target RTO communicates with the NOC-issuing RTO before approving re-registration, so why can't the source RTO trigger a (pro-rated) refund once they're informed that the re-registration has been processed? Why the need for the vehicle owner to chase them? What right does the source RTO have in holding onto the taxes once the vehicle isn't part of their jurisdiction?

[vinayrathore]

Originally Posted by sachinpk

1. There is also another aspect to this. Karnataka government of today is elected by people who are voters in Karnataka. The politicians of Karnataka have to take care of their voters first. Because ultimately it would be these people who the elected leaders have to answer, and on whose vote the politicians depend. What benefit does Karnataka government get by allowing the migrant population to roam around paying the tax dues? They do not vote any ways, and no much revenue comes from them as well. Given a chance legal loop holes are identified and taxes evaded.


2. Evading tax is a crime. And the "techies" from out side the state, also in my humble opinion made a mistake. Even though being the one among the largest work force available, none of them wanted to vote and be counted. A politician would try to change things, if he finds that would bring him votes. Techies were not interested in voting. In the area where I stayed, it had a large Malayali presence. The local MLA - an active chap used to scout around, identify issues and fix them. The Malayalis repeatedly pestered him with demands after demands. But this chap gave top priority to a neighbouring slum. Malayalis were dejected. And the MLA told them, next time get into the election rolls and vote for him. At present the slum dwellers vote for him en-masse. His logic was simple, Malayalis want every thing in their favour, but expect no help during elections. After this remark, Malayalis all lined up to register up as voters, the MLA won again and he did keep his promise (water laying, drainage making etc. etc.).

Emotional appeals may look fine here, but it may not work out especially when dealing in court cases or legislative process; or for that matter in regional politics.

1. Talking about benefits, If you look at things holistically, the KA Govt. has been earning a lot more (comparatively vis a vis road tax revenue) from the IT boom that has happened in the past 10-15 years. The migrant population that are staying here because of this boom (without paying any taxes as per you) are the biggest contributors to the indirect taxes too. Passing vague laws like the "30 days rule" is only denting this boom and the resultant revenue. Seems the state is more interested in having all the golden eggs at once.

2. If a person, who gets transferred to Bangalore for a short term, has to bring his 5~10 year old car along and within 30 days gets an unexpected tax notice of 1~2 lacs, you feel he is a criminal by not abiding by this draconian (in my opinion) law? That person has an equal right to protest any such law even if he is not a voter in that state. How on earth do they expect for anyone to cough up 1~2 lacs for a fully depreciated car's road tax and that too again?

Talking about wanting to vote or not, in my opinion, its this educated section of the society that makes the most informed choice in terms of choosing a govt. They at least do not go about voting for anyone who gives them a bottle and biryani. As far as I am concerned, applying for electoral rolls was one of the first things I did after my transfer and any other educated (read techie) would do. Not sure about your example. This is a totally different topic and a dirty one at that. Would not want to argue on this any more.

[binand]

Originally Posted by sachinpk

Evading tax is a crime.

There is no tax evasion here. Vehicle owners have already paid road tax. This is a second demand to pay the same tax.

So I think the big question the court will decide on is this: if I have paid a certain type of tax already, then is a second demand on me to pay the same tax just? Existing legal system seems to say it isn't - hence we have DTAAs and Input Tax Credits etc. Are the equity principles established by these sort of cases applicable for road tax also? I am not a lawyer, but I hope the court finds that the KA government's move is ultra vires to the constitution (in which case they'll have to refund all the money collected with interest, iirc).

[saket77]

If double taxation agreement can avoid it between countries, I don't think that implementing this among states of the same country should be any challenge. The only problem is the absence of intent of a transparent system.
Talking about double taxation, road tax is calculated on the ex-showroom price, which includes excise duty and state VAT. So, effectively you pay a tax on the tax, which comes as a substantial chunk of money if you do the math. Tell me one reason that why should one pay a tax over tax?

Plus, all RTOs charge the LTT for 15 years upfront while you use the services over 15 years. So, shouldn't the state Govt. pay interest for the unutilised part of your road tax as you will use the services over a period of 15 years? But obviously that is too much to expect.

My question is simple- just because an average joe does not have the time, money, knowledge and patience to fight these, does this makes him a soft target? This question is not only for KA RTO fiasco but for the entire system. Is this not extortion? Does the common man has such luxuries which the Govt. has over general people through such one- sided systems? Do RTOs process refund as promptly as they collect taxes? Will the same KA RTO process your refund as promptly as this collection drive?

The Govt. must clear this mess and there should be no bindings of travel or stay in the new system. Should I feel like a foreigner in my own country when I have not evaded any tax and have paid it at my place? I can pay a temporary road tax for the period I drive in Nepal or Bhutan, but not in my own motherland India! Wow!

[atnyia]

Originally Posted by prakash_ajp

And it's people's right to evade tax, huh? Going by your logic, that's poor argument too. If you read my post carefully enough, I was talking about the people who are deliberately evading tax.

That's not a poor argument. You are misquoting me with such assumption. You can't equate tax evading public to extortionist RTO. That's one crime to another. People can be criminal. Not the Govt Functions.

That's elementary to the modern law.

This law is criminal because it's a guilty until proven law. I repeat, the real problem is unreasonably high degree of discretionary power to RTO to seize vehicles where they assume that every IT guy who is coming out of office anywhere in Bangalore is settled in Bangalore.

[SILVERWOOD]

Originally Posted by saket77

If double taxation agreement can avoid it between countries, I don't think that implementing this among states of the same country should be any challenge. The only problem is the absence of intent of a transparent system.
Talking about double taxation, road tax is calculated on the ex-showroom price, which includes excise duty and state VAT. So, effectively you pay a tax on the tax, which comes as a substantial chunk of money if you do the math. Tell me one reason that why should one pay a tax over tax?

Karnataka charges LTT on the total value of invoice, including VAT.

Waseem,

[sachinpk]

Originally Posted by iambasilmathew

Can we not argue that changing the mandatory period of stay from 11 months(as provided by the Central Act for registering in the new state) to one month(although not for registration but for the paying the LTT) in the Karnataka MV act a blatant misrepresentation of the Central Act.

From what I understood, the requirement for re-registration of a vehicle if it remains in a new place (out side current place of registration) for a period exceeding 12 months; is noted in Section 47 of the MV Act 1988. Karnataka Government has not changed this. They cannot really do this, because this is a pan-India Act, and it needs to get President's ascent.

The Act which got modified is an "in-house" Act - the Karnataka Motor Vehicle Taxation Act, originally passed in 1957. The entire motor vehicle tax collection is based on this Act. This Act is only applicable in Karnataka, and so only the state's governor needs to give his approval. This approval has been given on Feb 2014 itself.

When I read the Central Act some 6-7 months before, I was under the impression that there is a section in Central Act which says that LTT needs to be paid only at the time of registration(Ofcourse I could be wrong, Have you see this yourself?). If this is true, can we not say that Karnataka has made modifications to its taxation act, which is against/contradicts a similar provision in the Central acts.

Do you remember which is the Central Act you checked up earlier? I spend nearly 3 hours yesterday to dig up cases & laws . I could not find a Central Motor Vehicle Taxation Act. And I again double checked the MV Act of 1988 to see if there is any provision regarding tax collection. I did not find any. Only sections I could see were related to fixing amounts to be paid as service charges (when applying for DL, Registration etc.). I have been asking others in the forum, to tell me if they have found any section in MV Act which talks about Taxation. No one has been able to do that.

So at this point, we need to assume that:-
1. MV Act and Karnataka Motor Vehicle Taxation Act, are two different pieces of legislation.
2. There is no provision in MV Act, which talks about taxation and that means, there is no real link between the two acts. MV Act totally keeps away from any taxation rules. That is left to the state specific acts.

Next question was about the concurrent & state list of the Constituition, which was brought out by binand. Here again, as far as I could figure out, the "principles of taxation of mechanical vehicles" are in the concurrent list (centre & state have powers), the actual part of "levying taxes on motor vehicles" is in the state list. So using the provisions mentioned in the Concurrent list, if the Central Govt. brings in a rule describing the way vehicles have to be taxed that becomes the "principles of taxation". Then the state can fix the taxes (still), but it has to be based on the rule made by Central Govt. But as far as I know, Central Govt. has not made any Act/law which clearly establishes what would be the "principles of taxation". For example, as part of the principles of taxation; the central government brings a law that a vehicle only needs pay LTT once, then no state law can supersede it and have provisions violating it.

So at this point, what I can understand is that Karnataka Government has amended a state specific law in which it has the full authority to make amendments. They ensured that the state's governor approves it. The idea of for this amendment is certainly to better the revenue position of the state, no two doubts of it. But from my understanding of the law (which can be incorrect), I feel the government played by the rule book.

Originally Posted by vinayrathore

Passing vague laws like the "30 days rule" is only denting this boom and the resultant revenue. Seems the state is more interested in having all the golden eggs at once.

The 30 day law is only effecting vehicle users (a sub-set of the population) and that too only a part of the vehicle users, who have non-KA vehicles. Karnataka government jolly well knows that getting tax dues from them is not going to make any impact in the overall IT Boom. Fine, all non-KA vehicle owners decides to quit the state in protest. Every IT company would find lots of attrition. Will KA government go bankrupt? In an over populated country like ours, there would be people to back fill that positions. And in the worst case, IT companies may decide to shift shops. Not a big deal there as well. IT boom has been in existence in Bengaluru for more 15-20 years now.

That person has an equal right to protest any such law even if he is not a voter in that state.

That is what folks like Silverwood & co. are doing. Even the tax act of Karnataka has clear provisions on how appeals can be filed, and how the tax payment request can be challenged. But if people don't use it, then who is to blame?

Originally Posted by binand

There is no tax evasion here. Vehicle owners have already paid road tax. This is a second demand to pay the same tax.

There is an aspect of "tax evasion", in my humble opinion. Are you suggesting that since the vehicle owner has paid an LTT in other state, he does not really require to pay LTT in any other state? Then the catch here is that every state is collecting LTT based on its own state specific taxation laws. A very generous state (if one exists) can even say that they will not collect road tax. So if I register my vehicle in KL, and pay the LTT there my tax duties to Kerala is fulfilled. But if that vehicle is used in Bengaluru, KA (exceeding one month) then I am bound by Karnataka state laws to pay LTT again. This is because these tax dues are from Karnataka government. Karnataka & Kerala do NOT have a tie up in sharing LTT. So thinking from the point of Karnataka State I am a tax defaulter; i.e I did not pay the tax which the law mandated.

Existing legal system seems to say it isn't - hence we have DTAAs and Input Tax Credits etc.

Every tax is not the same as one another. There are central govt. taxes like Income Tax, which is collected only once and irrespective of the state where the payer resides. There are other local taxes, which only has local validity. Tax Credits at the moment does not seem to apply for Motor Vehicle Taxation, as each state has its own law. Perhaps a new Central Govt. Act which lists out all the motor vehicle tax collection processes can clear all this up.

Originally Posted by atniya

I repeat, the real problem is unreasonably high degree of discretionary power to RTO to seize vehicles where they assume that every IT guy who is coming out of office anywhere in Bangalore is settled in Bangalore.

Leave aside the RTO part of it and the tax collection. Think logically, and take a sample size of 1000 people working in a big IT company. Generally most of the people who come out of IT offices at 1800hours after a day's work would be heading to his/her home within Karnataka state only. 70% would be such cases. 15% could be staying in border areas (like Hosur), and the other 15% would be people on temporary visits (1-2 weeks) at one stretch. But if you can prove that in a sample size of 1000 people coming out of an IT office majority of them are one time travellers to Bengaluru, then please provide more information.

Originally Posted by SILVERWOOD

Karnataka charges LTT on the total value of invoice, including VAT.

What is the latest update on the case, sir?
1. Has the Transport Commissioner arrived at the court and gave his statement? Do you have a copy of that statement?
2. When would the case be next hear. I understand three weeks have been given for the state to prepare its response.
3. And in your Writ Petition, what are the main actions in which you are asking relief? Is it only about the amendment of taxation laws by KA government, or it is also asking for relief from RTOs money collection drive?

[vinaydas]

To be fair, if a person has a vehicle from a state whose taxes are lower than Karnataka ,(I believe all states as KA's road tax is the highest) The government has the right to claim the difference in taxes after 11 months. The process is what is to be blamed here. The RTO here should be able to get the transfer done from the RTO from the source state and the difference being paid by the owner to KA RTO directly.

To be honest the people who end up diligently paying these taxes are a small number.
I personally know few people who have purchased cars from PY and even Bihar because of the lower tax structure in these states. They are clearly doing this to evade taxes.
Not to mention that these folks are already heavily invested in the city and are here to stay for the long term (purchased Land/apartments). The Government must strictly crack down on such defaulters as it is simply unfair to the people who are coughing up the extra taxes here to afford a vehicle where defaulters have found an easy way out.


P.S
This thread should be closed again and updated by moderators.

[Aditya]

sachinpk wishes to share this information:

Kerala is likely to follow in Karnataka's footsteps.

1. If a non-KL vehicle is found used in the state for a period exceeding one month, tax of Rs. 200 for two wheelers and Rs. 1,500 for four wheelers.
2. If the non-KL vehicle is used for a period exceeding a year, then KL life time tax to be levied.

Source: http://www.mathrubhumi.com/story.php?id=530440

[sachinpk]

Malayalam daily Mathrubhumi in its Bangalore edition reports that Hon. High Court of Karnataka has VACATED the stay for collecting LTT from Non-KA Vehicles. A friend of mine reported active tax collection drive in ORR yesterday evening.

I am attaching the screen image from the Hon.HC Web site. The WP (WP 594 2015) filed on this regard has been disposed off. Here IA means INTERLOCUTORY APPLICATION which essentially means a restraining order. That is the court has restrained a party from carrying out certain activity. When IA has been marked disposed, it has been revoked. That means the stay order has been vacated.

[Aditya]

sachinpk wishes to share this information:

Malayalam daily Mathrubhumi in its Bangalore edition reports that Hon. High Court of Karnataka has VACATED the stay for collecting LTT from Non-KA Vehicles.

This means the STAY is no longer in place and non-KA cars beware once again!

[GTO]

Thread re-opened, in light of recent developments.

[sumathindra]

This is the latest update on this matter...Not sure where this will lead however it certainly will bring in more friction with the RTO folks!

http://bangalore.citizenmatters.in/a...-to-begin-soon

[sachinpk]

Originally Posted by sumathindra

This is the latest update on this matter...Not sure where this will lead however it certainly will bring in more friction with the RTO folks!

It kind of missed me that the Karnataka Government has passed its latest budget for this FY. And that means they now would have the revenue forecast for the year as well. A few well planned tax collection drives all across the city and immediate highways, done over a period of say 1-2 weeks can bring in a lots of money to the state's treasury.

From the link which was posted, what caught my attention was the below part.
“We will be filing one or the other, on the grounds that the petitioner has challenged the constitutional validity of the amendment and hence the stay must be applicable to all till the court’s final order on the issue is out,” he told Citizen Matters.

It may be helpful to know how the petitioner argued that there is no constitutional validity for the said amendment. The points which were raised to prove this claim, if it can be put in here it would be helpful.