Shambulal G Chhabria vs. The State Of Karnataka

Facts

The petitioner, Shambulal G Chhabria, purchased a Mercedes Benz GLE Class AMG ELE 43-P vehicle on February 5, 2020, with a temporary registration. The manufacturer's invoice showed the vehicle's cost, including GST and Cess, as Rs. 70,00,000/-, making the Lifetime Motor Vehicle (MV) tax payable Rs. 12,60,000/-. However, the respondents, including the State of Karnataka and the Commissioner for Transport and Road Safety, took the dealer's invoice value of Rs. 99,20,000/- as the Ex-showroom price for calculating Lifetime MV tax. This resulted in a demand for an additional Rs. 5,25,600/- towards Lifetime MV tax, leading the petitioner to file a writ petition challenging this demand.

Held

The Court held that the amendment to Note No. 3(a) of Part A5 to the Schedule to the KMVT Act, which stipulated that Lifetime MV tax would be leviable on the higher of the manufacturer's or dealer's invoice price, was prospective and not retrospective. Since the petitioner purchased the vehicle on February 5, 2020, which was prior to the amendment's effective date of April 1, 2020, the amendment was not applicable to the petitioner's case. Therefore, the Lifetime MV tax was leviable on the value shown in the manufacturer's invoice. The Court found that the petitioner was liable to pay only Rs. 12,60,000/- towards Lifetime MV tax and was not liable to pay any additional tax demanded by the respondents. The Court directed the respondents to grant permanent registration to the petitioner's vehicle upon payment of Rs. 12,60,000/-. Liberty was reserved for the respondents to take steps to levy penalty, if any, in accordance with law, and the petitioner was reserved liberty to contest such proceedings.

Key Issues

1. Whether the Lifetime Motor Vehicle (MV) tax for a vehicle purchased before April 1, 2020, is leviable on the manufacturer's invoice price or the dealer's invoice price, considering the amendment to the Karnataka Motor Vehicles Taxation Act, 1957 (KMVT Act)? Petitioner's contention: The petitioner argued that since the vehicle was purchased on February 5, 2020, prior to the amendment of Note No. 3(a) to Part A5 of the Schedule to the KMVT Act, the Lifetime MV tax should be calculated based on the manufacturer's invoice price of Rs. 70,00,000/-, amounting to Rs. 12,60,000/-. They contended that the respondents' demand for additional tax based on the higher dealer invoice price was illegal and arbitrary. Respondents' contention: The respondents contended that by virtue of Section 3(1) of the KMVT Act and the amendment to Part A5 of the Schedule effective from April 1, 2020, the petitioner was liable to pay Lifetime MV tax on the higher of the manufacturer's or dealer's invoice price. Since the dealer's invoice price of Rs. 99,20,000/- was higher than the manufacturer's invoice price of Rs. 70,00,000/-, the total Lifetime MV tax payable was Rs. 17,85,600/-, and the demand for the additional amount was justified.