Despite Telangana High Courtc order, life tax not levied on invoice price

Hyderabad: Misinterpreting a judgment of the Telangana High Court, the transport department is levying life tax on the ex-showroom price of the vehicle rather than on the invoice price the amount that the buyer pays after discounts.

Asked about the practice, a transport official said the judgment was confined to the petitioner and would not be applicable to others. Advocates said if the High Court passes a common judgment related to consumer issues, it would be applicable to everyone facing a similar problem.

Up to 200 vehicles are registered in the city even in the off-season, which goes up manifold during festivals and auspicious days.

Mr A. Avishetti bought a vehicle for the invoice price of Rs 8,11,818 but paid 12 per cent life tax on the ex-showroom price of Rs 8,54,918. Dealers pay tax only on the invoice amount.

An advocate took the matter to the High Court which in May last year ruled that the transport department must levy tax on the invoice price.

Asked about the practice, Major P.T. Choudary (retd) from Maruti Automobiles said, “Customers are being charged on ex-showroom price. When some of them refer to the judgment, they are being told that it is applicable only to the petitioner.”

“We are paying tax for the final discounted amount, why this differentiation when it comes to vehicles,” he said. There were also Supreme Court judgments in this regard.

A transport official said there needs to be change in the policy level and the government should release an order to change the practice. “At the end of the day it is the state exchequer. We can not decide in the department itself,” said an RTO officer.

The High Court in its common judgment on January 29, 2019, dismissed a writ appeal filed by the RTA, Hyderabad Central Zone, against its ruling to levy life tax on the invoice price of the vehicle, and said, “The appeal is devoid of merits and is accordingly dismissed. As a sequel to the disposal of these petitions, miscellaneous petitions, if any pending, shall stand closed.”

Another official from the transport department said, “At times the dealers give unreasonable discounts. A Rs 10-lakh vehicle is being sold for Rs 5 lakh. Then it is a loss to the exchequer. There  should be bar on discounts as well, so that the exchequer is not affected.”

The judgment said, “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 transfer of vehicle from the dealer to the purchaser. There is no law prohibiting the dealers from giving discounts and practices of dealers in giving discounts cannot be said to be unethical or immoral or a fraud on the state.

Mr C.L.N Gandhi, retired additional commissioner for transport, said, “In the Motor Vehicles Act, there is no definition of ‘cost’. In the absence of that, RTO cannot cite the showroom price as the cost price. The tax should be collected depending on the invoice amount, as per the judgment.”