VIJAYAWADA: The Andhra Pradesh High Court has made it clear that life tax on a car is payable based on the gross invoice value of the vehicle and not on the ex-showroom price.
In a recent verdict on petitions filed by T Sowjanya in 2019 and Pawan Chand in 2021 contesting the Road Transport Department collecting life tax on ex-showroom price, Justice V Sujatha said as per the VI schedule of the Motor Vehicle Taxation Act, life tax is calculated on the real value of the vehicle. The court directed the RTA to return the additional amount collected from the petitioners within four weeks.
In 2019, Sowjanya of Vijayawada approached the court stating that 14% life tax was collected on the ex-showroom price for her Hyundai Venue car and it was Rs 52,168 more. Similarly, Pawan Chand accused the RTA of collecting Rs 1.16 lakh more from him in the same manner.
Petitioners’ counsel MRK Chakravarthy said the cost of the car is the price at which the dealer sells it to the consumer, excluding taxes. Hyundai Venue price was Rs 8,60,853. As per the rules, 12% life tax is collected on the vehicles valued less than Rs 10 lakh.
Hence, the life tax payable on the vehicle was Rs 1,03,303 only, but the value of the car was fixed at its ex-showroom price of Rs 11,10,500 and life tax was calculated at 14% at the time of registration. The petitioner had to pay Rs 1,55,470 as life tax, against the prescribed Rs 1,03,303 as per norms, he informed the court. Pawan Chand had to pay Rs 1.16 lakh additionally for the registration of his BMW car.
Appearing on behalf of the transport department, the government pleader said life tax is calculated on the price of vehicle and the price includes GST, cess, etc. Hence, 14% life tax was collected by the RTA in accordance with the circular issued by the department in 1994, he contended. The court agreed with the arguments of the petitioners’ counsel and directed the RTA to pay back the additional amount collected from the petitioners.