In Writ Petition No. 12089 of 2019 -AP HC- Andhra Pradesh High Court rules Life Tax to be collected based on net invoice price of vehicle
Justice V. Sujatha [13-06-2023]

Read Order: TalasilaSowjanya v. The State of Andhra Pradesh

Chahat Varma

New Delhi, July 11, 2023: The Andhra Pradesh High Court has ruled that that life tax collected from vehicle owners upon registration should be based on the net invoice price of the vehicle at the time of sale, rather than the ex-showroom price.

The decision came in response to a case where a petitioner had purchased a Hyundai Venue and was compelled to pay additional tax under Section 3 of the Andhra Pradesh Motor Vehicles Taxation Act, 1963 on the net invoice price, which included CGST, SGST, and Compensation Cess. The petitioner argued that such tax collection lacked authority and referred to a government order allowing for refund of excess or mistakenly paid tax within a limited time frame.

The bench of Justice V. Sujatha held that life tax collected from vehicle owners upon registration should be based on the net invoice price of the vehicle. It wasobserved that life tax can only be levied on the ‘cost of the vehicle’ as specified in the Sixth Schedule of the A.P. Motor Vehicles Taxation Act, 1963, unless there was a notification indicating otherwise. In the absence of such notification, life tax should be calculated based on the ‘cost of the vehicle’.

In light of the aforementioned findings, the bench granted the writ petitions and directed the respondents to refund an amount of Rs. 52,168 to the petitioner in W.P. No. 12089 of 2019 and an amount of Rs. 1,16,000 to the petitioner in W.P. No. 3049 of 2021, 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.