[TusharK]

The Telangana High Court has ruled that life tax on vehicles can only be levied on its invoice price and not on its ex-showroom price.



A petition was filed by advocate Kishore Rai, who said that the Regional Transport Authority (RTA) had charged life tax on the ex-showroom price which was higher than the invoice price. He had purchased a Volvo XC60 at a discount of Rs. 3 lakh on the ex-showroom price and had claimed a tax refund of Rs. 51,000.

The court ruled that the petitioner is entitled for a refund since the ex-showroom price is not the actual cost of the vehicle. The RTA has been ordered to process the refund within the next 3 weeks.

Source: ET Auto

Link to Team-BHP News

[varun83]

A similar ruling has been given by the Madras High court as well ...you can pull out the detailed judgement online. It bears the Writ petition number 8985 of 2018

[i74js]

This is commendable; atleast the judicatory is not biased when it comes to logical thinking. The government taxes are chargeable on the amount paid by the buyer and not on the list price / ex-showroom.

I think, this can be used as a precedence to fix this issue across other RTOs across multiple states.

[Latheesh]

Now the state governments will increase the road tax percentage to compensate their losses. At the end we consumers do not earn anything.

[byomjeet]

I think; based on this ruling of the Honourable High Court of Telengana, other states should follow.

[serious_maniac]

This is very logical.

Thinking from Govt. side the challenge in this kind of situation is cash component in car purchase. But this is no different than house / property purchase.

BTW, How can I get it implemented if I were to buy a vehicle in Bangalore?

~m

[swissknife]

Originally Posted by TusharK

The Telangana High Court has ruled that life tax on vehicles can only be levied on its invoice price and not on its ex-showroom price.

Attachment 1759754

A petition was filed by advocate Kishore Rai, who said that the Regional Transport Authority (RTA) had charged life tax on the ex-showroom price which was higher than the invoice price. He had purchased a Volvo XC60 at a discount of Rs. 3 lakh on the ex-showroom price and had claimed a tax refund of Rs. 51,000.

The court ruled that the petitioner is entitled for a refund since the ex-showroom price is not the actual cost of the vehicle. The RTA has been ordered to process the refund within the next 3 weeks.

Source: ET Auto

Link to Team-BHP News

While this is logical and welcome, taxes (excise duty, sales taxes etc) have always been applied before trade discounts, wouldn't the govts fight back on these grounds?

[jetsetgo08]

Last year, I paid Rs.4800 in the form of a DD to the RTO, for my Wagon R, as I got a discount of 40k on the on-road price. This was reflected in the invoice, and during the registration they calculated the additional tax to be paid as 12% of 40k.

But, for those cars where the discounts run to the tune of lakhs, it is a huge benefit to the customer.

[A M]

I'm not very sure though, but I heard in Punjab the RTO charges are calculated on the ex-factory price (?) i.e "ex-showroom minus GST".

[sugam]

Originally Posted by A M

I'm not very sure though, but I heard in Punjab the RTO charges are calculated on the ex-factory price (?) i.e "ex-showroom minus GST".

True, I paid Chandigarh (technically not Punjab) 6% of ex-factory price, i.e. ex-showroom minus GST. So ended up paying roughly 48k on my 8L hexa.

[anjan_c2007]

An excellent judgement based on simple common sense and principles of natural justice. I believe the Union Road Transport Ministry should direct all State and Union Territory Transport Commissioners to abide by this Hyderabad High Court decision, (also the one of the Madras High Court) to avoid further mindless and infructuous litigation. Such litigation costs the States/ UT's a huge amount of money (they are no doubt gaining by the illegal levy of excess road tax on the "on-road" price of a motor vehicle) and moreover wastes precious time of the judiciary. The petitioners too have to put in their efforts and pay through their noses, but in this case it was a lawyer himself challenging the wrongful practice by the State.

It would be praiseworthy if the respective High Courts also impose heavy penalties on the States, who impose such illegal charges. Such penalties levied by High Courts are usually payable by the parties to the Court Registry, which in turn transfers the amount to the Bar Association Legal Aid Committee (most court orders state this explicitly).

[GTO]

Originally Posted by serious_maniac

Thinking from Govt. side the challenge in this kind of situation is cash component in car purchase. But this is no different than house / property purchase.

I too was worried about this. However, manufacturers watch dealer selling prices with an eagle eye. You could say that they more or less exercise control on the discounts offered by the dealer. Hence, I would like to believe that a situation where a customer pays 5 lakhs in cash to the dealer and gets a 'discount on paper' to save taxes won't become common. Maybe a handful of unscrupulous dealers might, but the scam won't be as rampant as it is in the property sector.

[androdev]

While helping a friend buy a used car in Hyderabad, RC details on the Vahan portal have "Tax Valid Upto" date as 12 years after date of registration. "Fitness valid upto" shows a date 15 years after date of registration. Shouldn't the tax validity for TS cars be for life (LTT)? KA vehicles show Life Time Tax for tax validity. Do TS car owners have to pay road tax again?

[Turbanator]

Originally Posted by androdev

While helping a friend buy a used car in Hyderabad, RC details on the Vahan portal have "Tax Valid Upto" date as 12 years after date of registration. "Fitness valid upto" shows a date 15 years after date of registration. Shouldn't the tax validity for TS cars be for life (LTT)? KA vehicles show Life Time Tax for tax validity. Do TS car owners have to pay road tax again?

Tax is usually valid for 15 years which is same as the fitness valid. Thereafter, depending on the RTO and class of vehicle, you can renew for 2 or 1 year.

Regarding 12 years, if that’s what’s mentioned on the RC, you will need to deposit for next 3 years at expiry of 12th. Must be state subject, life time is just another way to say in some states but it’s not correct.