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2024 Supreme(Online)(TEL) 20956
HIGH COURT OF TELANGANA
NAGESH BHEEMAPAKA, J
Aloor Venkat Rohan Rao – Appellant
Versus
The State of Telangana – Respondent
WP/33567/2024
Taxing statutes must be strictly construed in favor of the taxpayer; tax is based on actual ex-showroom price at the time of physical registration.
Headnote:(A) Telangana Motor Vehicles Taxation Act, 1963 - Sections 2, 3, and Seventh Schedule - Motor Vehicles Act, 1988 - Section 43 - Petitioner challenged the demand for additional tax based on inflated vehicle price and the classification of vehicle as 'second vehicle' despite selling the previous vehicle before registration - Court ruled that tax should be levied based on actual ex-showroom price of Rs. 23,99,000/- and not on inflated price of Rs. 25,93,999/- - Court emphasized that the date of physical registration is relevant for tax imposition, not the date of temporary registration. (Paras 1, 3, 5, 6, and 7)
(B) Taxation Principles - Taxing statutes must be strictly construed in favor of the taxpayer - The court reaffirmed that additional tax applies only if the taxpayer owns more than one vehicle at the time of registration, not at the time of temporary registration. (Paras 3 and 5)
Facts of the case:
The petitioner purchased a vehicle at an ex-showroom price of Rs. 23,99,000/- and paid Rs. 4,31,820/- as tax. The authorities demanded additional tax based on a higher price and classified the vehicle as a 'second vehicle' despite the sale of the previous vehicle.
Findings of Court:
The court found in favor of the petitioner, stating that tax should be based on the actual ex-showroom price and directed the registration of the vehicle without additional tax.
Issues: The main issues included the legitimacy of the additional tax demand based on inflated pricing and the classification of the vehicle as a second vehicle.
Ratio Decidendi: The court ruled that the tax should be based on the actual ex-showroom price and emphasized that the date of physical registration is the relevant date for tax purposes.
Result: The Writ Petition is disposed of in favor of the petitioner, directing registration without additional tax.
ORDER:
Petitioner seeks the following relief:
(i) declare the action of the Respondents in directing the Petitioner to pay additional amount of Rs. 47,980/- based on the price list maintained by the 3 rd respondent by treating Rs. 25,93,999/- as the cost of vehicle, though the actual ex- showroom price is Rs. 23,99,000/- as on 11-11-2024 i.e., the date of purchase of the vehicle, as illegal, arbitrary and violative of Sections 2 and 3 of the Telangana Motor Vehicles Taxation Act , 1963 (ii) declare that the provisions of the Seventh Schedule of the Telangana Motor Vehicle Taxation Act, 1963 are not applicable to petitioner and consequently declare that the action of petitioner to pay Rs. 39,010/- being additional 2% tax payable as per the Seventh Schedule by treating that Mahindra XUV 700 AX7 L Diesel AT 7-Seater variant, Midnight Black Colour bearing Temporary Registration Mark TG 10ETR 9644 purchased by him is a second vehicle as on the date of registration as illegal and violative of the provisions of Telangana Motor Vehicles Taxation Act , 1963.
(iii) declare the inaction of Respondent No.3 in refusing to register Mahindra XUV 700 AX7 L Diesel AT 7-Seater variant, Midnight Black Colour bearing Temporary Registration Mark TG 10ETR 9644 in favour of the Petitioner as illegal, arbitrary and violative of provisions of Telangana Motor Vehicle Taxation Act, 1963 and the rules framed thereunder and Article 14 of the Constitution of India.
(iv) Consequently, direct the Respondents to register Mahindra XUV 700 AX7 L Diesel AT 7-Seater variant, Midnight Black Colour bearing Temporary Registration Mark TG 10 ETR 9644 in favour of the Petitioner with registration number TG 11 A 5858, without insisting any additional tax amount in addition to Rs. 4,31,820/- already paid by the Petitioner on 11. 11- 2024 through transaction number 49NETR029070153 as per the Sixth Schedule of the Telangana Motor Vehicles Taxation Act , 1963 and pass such further or other order(s) as this Hon’ble Court may deem fit and proper in the circumstances of the case.
2. Petitioner, on 11-11-2024, purchased Mahindra XUV 700, AX7L, BS6 Diesel variant, in Midnight Black colour, from Neon Motors Private Limited, Ex-showroom price of which was Rs. 23,99,000/- with no discounts provided by the vendor. Sale was confirmed through a Sale Certificate issued by the dealer. Additionally, petitioner paid Rs. 4,31,820/- as vehicle tax, which is 18% of the ex-showroom price, as per Schedule VI of the Telangana Motor Vehicles Taxation Act , 1963.
Furthermore, petitioner was provided with Vehicle Fitness Certificate under Form 22 by the dealer and insurance policy dated 11-11-2024.
In compliance with Section 43 of the Motor Vehicles Act , 1988 (for short, ‘the Act’), petitioner obtained temporary registration of vehicle through the dealer with Temporary Registration Mark TG 10 ETR 9644, according to the provisions of the Telangana Motor Vehicle Rules, 1989, specifically Rule 84, which grants the dealer the authority to issue such registration for new vehicles sold.
It is stated, petitioner reserved Registration Number TG 11 A 5858 for the vehicle, with an allotment proceeding dated 19-11-2024 and he is required to complete the vehicle registration within 15 days from the date of reservation. On 25-11-2024, when petitioner approached the 3 rd respondent authority to complete the registration process, he was informed that an additional tax of Rs. 86,990/- is required to be paid. The reasons provided therefor were two-fold: firstly, records of the 3 rd respondent indicated an ex-showroom price of Rs.25,93,999/-, and therefore, a differential tax amount of Rs.47,980/- was demanded; secondly, petitioner was informed that vehicle, though purchased as a new vehicle, was considered as ‘second vehicle’ as of registration date, and as per the provisions of the Telangana Motor Vehicles Taxation Act , 1963, an additional 2% tax of Rs. 39,010/- was applicable for second vehicle.
Petitioner, it is sta
