Hyderabad: The Hyderabad High Court on Tuesday held that the state cannot be allowed to levy life tax on the ex-showroom price of vehicles, which is not the actual “cost of the vehicle”.
Justice M.S. Ramachandra Rao, while directing the Telangana state transport commissioner to refund the excess amount collected from a vehicle owner within four weeks, observed, “As per common understanding the ‘cost of the vehicle’ is the amount actually paid by the purchaser to the dealer, and is the consideration for transfer of vehicle from the dealer to the purchaser.”
Mr Kishore Rai Sohni, a city advocate moved the court questioning the action of the transport authorities in insisting that he pay life tax on ex-showroom price and not on the net invoice price as indicated in Circular Memo dated August 30, 2008 issued by the transport commissioner.
Mr Sohni told the court that he had purchased a Volvo XC 60 D5 Inscription model for Rs 52.90 lakh and the dealer had given a discount of Rs 3 lakh and the ex-showroom cost of the vehicle was Rs 55.90 lakh. However, the transport authorities forced him to pay Rs 51,000 extra. He contended that the action of the transport authorities is illegal and violates Articles 14 and 300-A of the Constitution and that he was entitled to seek refund of the same. The transport department contended that the very sale by giving discounts by a dealer is unethical, immoral and is a fraud on the state exchequer.
Holding that the life tax is to be calculated on the ‘cost of the vehicle’ under the Sixth Schedule of the AP Motor Vehicles Taxation Act, 1963, the Judge said, “There is no law prohibiting dealers from giving discounts and practice of dealers in giving discounts cannot be said to be unethical or immoral or a fraud on the state. The court cannot close its mind to such business practices which are permitted and which are not prohibited by law.”
