Used Vehicles Brought into Telangana Must Pay Life Tax, Even If Already Taxed in Another State: Telangana HC [Read Order]

In a recent ruling, the Telangana High Court held that used vehicles brought into the state for permanent use are liable to pay life tax, even if the vehicle had already been taxed in another state.

Sri Vattikuti Abbaiah, the petitioner, had purchased a used BMW 730LD from Delhi and brought it to Hyderabad in September 2022. He approached the Telangana transport authorities to transfer the ownership of the vehicle but was asked to pay Rs. 14.91 lakhs as life tax and penalties.

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The petitioner's counsel argued that this demand was unlawful since the vehicle had already been taxed in Delhi under the OTT provision and that Section 47 of the Motor Vehicles Act, 1988, did not permit re-imposition of life tax.

The Telangana Transport Department argued that under Section 3 of the Telangana State Motor Vehicles Taxation (TSMVT) Act, 1963, life tax is due on all vehicles used or kept for use within the state. The department’s counsel cited G.O.Ms. No. 22 dated 07.05.2022, which mandates that life tax be calculated based on the vehicle's invoice value, with reductions for age.

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They argued that since the vehicle was being permanently transferred and re-registered in Telangana, tax liability under the state law was triggered and also claimed that any prior tax paid in another state does not exempt the vehicle from paying tax again in Telangana.

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The single-judge bench comprising Justice Nagesh Bheemapaka observed that the petitioner’s act of bringing the vehicle into Telangana and seeking ownership transfer made it subject to state taxation. The court noted that the Sixth Schedule to G.O.Ms. No. 22 clearly lays down tax rates for non-transport vehicles based on their age and value. The court further held that precedents cited by the petitioner involved different factual contexts, such as vehicles temporarily present in the state, so were not applicable to the present case involving a permanent transfer of ownership.

The court clarified that this applies regardless of whether a one-time tax (OTT) was paid in the previous state, as each state has the authority to independently levy taxes on vehicles registered or used within its jurisdiction.

The court explained that the TSMVT Act operates independently of the Motor Vehicles Act, and the tax liability imposed by Telangana was lawful. The writ petition was accordingly dismissed.

To Read the full text of the Order CLICK HERE

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