No 2% Additional Tax for "Second Vehicle" if Previous Vehicle Sold Before Registration: Telangana HC [Read Order]
Considering the petitioner sold the first car at the time of permanent registration, the Telangana HC rules no additional tax was needed
Telangana HC – Telangana High Court – Telangana Motor Vehicles Taxation Act – Motor Vehicles Taxation Act – taxscan
Telangana HC – Telangana High Court – Telangana Motor Vehicles Taxation Act – Motor Vehicles Taxation Act – taxscan
In a recent judgment, the Telangana High Court ruled that the 2% additional tax for a "second vehicle" under Schedule VII of the Telangana Motor Vehicles Taxation Act, 1963, cannot be levied if the owner has already sold their previous vehicle before the permanent registration of the new vehicle.
Aloor Venkat Rohan Rao, the petitioner purchased a Mahindra XUV 700 AX7L Diesel AT 7-Seater variant in Midnight Black on November 11, 2024, from Neon Motors Private Limited at an ex-showroom price of Rs. 23,99,000.
The petitioner paid Rs. 4,31,820 as vehicle tax, which is 18% of the ex-showroom price, under Schedule VI of the Telangana Motor Vehicles Taxation Act, 1963. A temporary registration number TG 10 ETR 9644 was issued by the dealer in compliance with Section 43 of the Motor Vehicles Act, 1988, and Rule 84 of the Telangana Motor Vehicle Rules, 1989.
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The petitioner reserved the permanent registration number TG 11 A 5858 on November 19, 2024, with an obligation to complete the registration process within 15 days.
On November 25, 2024, the Regional Transport Authority (RTA) demanded an additional tax of Rs. 86,990, citing two reasons. One was alleged higher ex-showroom price of Rs. 25,93,999 which led to a differential tax demand of Rs. 47,980 and another one was 2% additional tax for treating the vehicle as a "second vehicle" of Rs. 39,010.
The petitioner submitted evidence, including a screenshot, showing that his previous vehicle (AP 11 AP 5694) was sold and ownership was transferred to a new buyer on November 13, 2024, before the registration of the new vehicle.
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The petitioner’s counsel relied on the judgment in Rohit Nayani v. The State of Telangana, which held that tax applicability is determined at the time of permanent registration, not temporary registration.
The respondent argued that the petitioner was liable for a total tax of 20% under Schedule VII, as he owned another vehicle at the time of temporary registration.
The bench comprising Justice Challa Kodanda Ram and Justice Nagesh Bheemapaka referred to the distinction between temporary license and permanent registration stating that tax applicability is determined at the time of physical registration.
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The court observed that the petitioner provided sufficient evidence to prove the sale of his previous vehicle before the date of permanent registration. The court ruled that the ex-showroom price was Rs. 23,99,000 as confirmed by the GST invoice and dealer’s letter and that the tax of Rs. 4,31,820 paid at 18% was correct under Schedule VI.
The court dismissed the additional tax demand of Rs. 86,990 as unwarranted and directed the RTA to complete the vehicle registration with the reserved number TG 11 A 5858 without any additional payment.
To Read the full text of the Order CLICK HERE
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