Karthikeyan Natarajan vs. State Of Tamil Nadu, Represented By Its Transport Secretary

Facts

The petitioner, Karthikeyan Natarajan, purchased a used Light Motor Vehicle (Car) bearing registration number HR51BP0201 on 24.08.2025 for Rs. 9,15,000/-. The vehicle was originally registered in Haryana, where lifetime road tax had been paid. The petitioner sought re-registration and transfer of ownership in Tamil Nadu. The Regional Transport Officer (RTO), Trichy West, demanded Motor Vehicle Tax of Rs. 6,02,069/- based on a VAHAN Online Portal valuation of Rs. 35,94,439/-, which was significantly higher than the original invoice price of Rs. 28,37,074/-. The petitioner challenged this demand, arguing that the vehicle had already paid lifetime tax in Haryana and the inflated valuation was arbitrary.

Held

The Court held that Section 2(1-A) of the Tamil Nadu Motor Vehicles Taxation Act, 1974, clearly defines the "cost of the vehicle" as the total price paid at the time of purchase, as evidenced by the invoice issued by the authorized dealer or manufacturer, excluding taxes like GST. In this case, the original invoice value was Rs. 28,37,074/-. Therefore, the fixation of the vehicle's value at Rs. 35,94,439/- by the respondents was not supported by any statutory basis. Consequently, the impugned demand of Motor Vehicle Tax was found to require reconsideration. The Court set aside the impugned proceedings and remanded the matter to the second respondent for fresh consideration. The second respondent was directed to take the cost of the vehicle as Rs. 28,37,074/- and levy Motor Vehicle Tax at the rate of 16.75% as per Part II of the Third Schedule to the Act, to be completed within four weeks.

Key Issues

1. Whether the Motor Vehicle Tax demanded by the second respondent, based on an inflated vehicle value of Rs. 35,94,439/-, is legally sustainable under the Tamil Nadu Motor Vehicles Taxation Act, 1974, particularly Section 2(1-A)? Petitioner's arguments: The petitioner contended that the "cost of the vehicle" for tax calculation should be the original invoice value of Rs. 28,37,074/-, as per Section 2(1-A) of the Act, which refers to the price paid at the time of purchase as evidenced by the invoice. They argued that the VAHAN portal's inflated value was without material basis and illegal, especially since lifetime tax had already been paid in Haryana. The petitioner was willing to pay all applicable fees except the excessive tax. Respondents' arguments: The respondents argued that Section 2(1-A) of the Tamil Nadu Motor Vehicles Taxation Act, 1974, as amended effective 07.11.2023, defines "cost of the vehicle," and tax is calculated based on Part II of the Third Schedule. They asserted that concessions are based on vehicle nature and age, and the valuation was done strictly in accordance with the statute.