Justice Challa Kodanda Ram and Justice Nagesh Bheemapaka of the Telangana High Court delivered a significant judgment on November 29, 2024, clarifying that the 2% additional tax for owning a second vehicle under Schedule VII of the Telangana Motor Vehicles Taxation Act, 1963, does not apply if the first vehicle has been sold prior to the registration of the new vehicle.
The ruling came in Writ Petition No. 33567 of 2024, filed by Mr. Aloor Venkat Rohan Rao, who challenged the additional tax demand for his newly purchased Mahindra XUV 700.
Background of the Case
The petitioner, Mr. Rao, purchased a Mahindra XUV 700 (Diesel AT 7-Seater, Midnight Black) on November 11, 2024, from Neon Motors Pvt. Ltd. at an ex-showroom price of ₹23,99,000. He paid ₹4,31,820 as vehicle tax at 18% under Schedule VI. However, when he approached the Regional Transport Authority (RTA) for permanent registration, the RTA demanded an additional ₹86,990, citing:
1. A higher ex-showroom price of ₹25,93,999, resulting in a differential tax demand of ₹47,980.
2. A 2% tax under Schedule VII, arguing that the petitioner owned another vehicle at the time of temporary registration.
The petitioner contended that he had sold his previous vehicle (Registration No. AP 11 AP 5694) on November 13, 2024, before completing the permanent registration of the new vehicle.
Key Legal Issues
1. Whether the ex-showroom price claimed by the RTA could be used for tax calculations despite evidence to the contrary.
2. Whether the petitioner’s ownership of another vehicle at the time of temporary registration justified the 2% additional tax under Schedule VII.
Arguments and Submissions
For the Petitioner:
Senior Counsel Sri A. Giridhar Rao, representing the petitioner, argued:
– Taxes under Schedule VII apply only if the taxpayer owns more than one vehicle at the time of permanent registration.
– The petitioner’s earlier vehicle had been sold and transferred to a third party on November 13, 2024, as evidenced by a transfer of ownership certificate.
– Temporary registration is distinct from permanent registration for tax purposes, as clarified in Rohit Nayani v. State of Telangana.
– Taxing statutes must be strictly interpreted in favor of the taxpayer.
For the Respondents:
Government Pleader Sri M. Vigneshwar Reddy contended:
– The vehicle’s ex-showroom price was ₹25,93,999 as per official records, justifying a differential tax.
– The petitioner owned another vehicle at the time of temporary registration, warranting the 2% additional tax.
Court’s Observations
The High Court, after examining the evidence, ruled in favor of the petitioner. It made the following key observations:
– The ex-showroom price was ₹23,99,000, as corroborated by GST invoices and a letter from the dealer, contrary to the RTA’s claim.
– The additional 2% tax under Schedule VII could not be applied because the petitioner’s earlier vehicle had been sold before the new vehicle’s permanent registration.
The court emphasized: “When the Act states ‘at the time of registration of a new vehicle,’ it refers to the date of physical registration at the RTA office, not the temporary registration generated by the dealer.”
Court’s Directions
The Telangana High Court directed the RTA to:
1. Register the petitioner’s vehicle under the reserved number TG 11 A 5858 without imposing any additional taxes.
2. Accept the tax payment of ₹4,31,820 as final and adequate.
