Shashikanthraj Urs H R vs. The State Of Karnataka

Facts

The petitioner purchased a Mercedes Benz GLC 220D vehicle on January 30, 2020, with an invoice price from the manufacturer of Rs. 45,25,000/- (including GST and Cess). This resulted in a Lifetime Motor Vehicle (MV) tax liability of Rs. 8,14,500/-. The respondents, however, used the dealer's invoice price of Rs. 57,75,000/- to calculate the Lifetime MV tax, demanding an additional Rs. 2,01,363/- for permanent registration. The petitioner challenged this demand, seeking registration without paying the additional tax or any penalty for late registration.

Held

The Court held that the amendment to Note No. 3(a) of Part A5 to the Schedule to the KMVT Act, which introduced the 'whichever is higher' clause for calculating Lifetime MV tax based on manufacturer's or dealer's invoice price, is prospective and not retrospective. Since the petitioner purchased the vehicle on January 30, 2020, prior to the amendment's effective date of April 1, 2020, the amendment is not applicable to this case. Therefore, the Lifetime MV tax is leviable on the value shown in the manufacturer's invoice. The Court found no merit in the respondents' demand for additional tax based on the dealer's invoice price. The Court directed the respondents to grant permanent registration upon payment of Rs. 8,14,500/- and reserved liberty for the respondents to take steps for levying any penalty in accordance with law, with liberty for the petitioner to contest such action.

Key Issues

1. Whether the Lifetime MV tax for a vehicle purchased prior to April 1, 2020, is leviable on the manufacturer's invoice price or the dealer's invoice price, considering the amendment to Note No. 3(a) of Part A5 to the Schedule of the Karnataka Motor Vehicles Taxation Act, 1957 (KMVT Act). The petitioner argued that for vehicles purchased before April 1, 2020, the tax should be based on the manufacturer's invoice price, as the amendment introducing the 'whichever is higher' clause was prospective. The petitioner relied on the original Note No. 3(a) which did not specify taking the higher value. The respondents contended that the amendment to Note No. 3(a) of Part A5 to the Schedule to the KMVT Act, effective April 1, 2020, mandates that Lifetime MV tax is payable on the higher of the manufacturer's or dealer's invoice price. They argued that since the dealer's invoice price was higher, the petitioner was liable for the increased tax.