The Andhra Pradesh High Court (HC) has ruled that life tax should be levied on the net invoice of the price of the vehicle and not on the ex showroom price which admittedly includes the taxes payable to the government.
The bench of Justice V. Sujatha has directed the state to refund the excess life tax amount which was collected. Also observed that life tax can be levied only on the cost of the vehicle under the 6th schedule of the A.P. Motor Vehicles Taxation Act, 1963.
As the writ petitions shared the common issues, the High Court heard both together. The Petitioner has purchased a vehicle. At the time of purchase, the petitioner on demand paid Rs. 2,41,038.38 towards 28% and Rs. 8608 towards the compensation cess under Goods and Services Taxes (GST Act).
The petitioners relied on the judgment in the case of R.N. Hemendranath Reddy Vs. State of Telangana, the Court observed that the life tax to be collected from a vehicle owner produced for registration upon the sale based on the net invoice price of the vehicle and not upon the ex-showroom price of the vehicle.
Further in the case of Kishore Rai Sohni Vs. The State of Telangana in which the court allowed the excess amount collected from the petitioner towards life tax in excess of the life tax payable by the petitioner under the Sixth Schedule to the Act on the invoice sale price to the petitioner.
The respondent filed a counter stating that the life tax on Motor cars is levied on the cost of the vehicle as per Sixth Schedule to the Fourth proviso to sub section (2) of Section 3 of the Andhra Pradesh Motor Vehicles Taxation Act, 1963.
Further added that the cost of the vehicle is the actual consideration paid by the purchaser on purchase of the motor vehicle from the dealer. This consideration includes IGST, Compensation cess under GST also, which comprises the total amount paid by the purchaser.
The High Court stated that “it is clear that the life tax is to be collected from the vehicle owner upon the sale based on the net invoice price of the vehicle and not upon the ex-showroom price of the vehicle. The life tax can be levied only on the cost of the vehicle under the 6th schedule of the A.P. Motor Vehicles Taxation Act, 1963.”
The bench, relying on the judgment quoted by the petitioner, Kishore Rai Sohni Vs. The State of Telangana, directed to refund which were collected in excess of the life tax payable by both the petitioners under the Sixth Schedule to the Act on the invoice sale price, within a period of four (4) weeks from the date of receipt of a copy of this order.
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