Kerala Govt to consider Kerala Motor Vehicles Taxation (Validation) Bill to Counter HC ruling on Vehicle Tax

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The Kerala State Legislative Assembly to consider the new bill on motor vehicle taxation on Thursday, with a view to overcome the High Court order in Fathima Shirin vs joint transport officer, Kayamkulam [2013 (3) KHC 714], forcing the State to refund vehicle tax collected from citizens. This is with an aim to avoid huge loss to the exchequer.

The bill, titled the Kerala motor vehicles taxation (validation) bill, 2016, has been forwarded to the consideration of the subject committee for examination.

The bill will validate the manner in which the purchase value of vehicles have been determined, which was challenged before the HC. The government had assessed the purchase value of vehicles by adding with its price value added tax, customs duty and other charges. This was challenged before the HC in which the court ruled that the purchase value of a vehicle cannot be determined in this manner.

In order to overcome this, the government had amended the section 2(e) of the Kerala Motor Vehicles Taxation Act, 1976, to define purchase value by adding VAT, excise and customs duty and cess, giving it a retrospective effect from April 1, 2007. Though the definition was amended, the action of levying the tax in such a manner, was not validated. Through the latest bill, the government has given validation to levying vehicle tax in the said manner, that will cover the period from April 1, 2007 to July 23, 2014, that would cover the period of the high court order.

According to the government, if the procedure is not given validation through the bill, it would cause a burden of crores of rupees on the state exchequer. The bill will come for voting before the assembly after examination by the subject committee next week.