Excelsior Correspondent
JAMMU, Oct 19: Division Bench of the High Court comprising Justice Rajesh Bindal and Justice Sanjay Dhar has set aside the notices of the Transport Department whereby the automobile dealers were directed to deposit differential amount of token tax/fees of the vehicles sold by them from August 3, 2019 to November 26, 2019.
The petitioners including Jammu Automart Pvt Ltd through their respective counsels submitted that vide SRO-492 dated August 1, 2019 issued by the Transport department the registration fee on the vehicles was increased. As against the earlier system of payment of registration free on annual basis, one time ad-valorem tax was levied.
Prior to that, vide communication dated October 12, 2017, issued by the Transport Department, dealer assisted system for registration of vehicles was introduced. “The idea was to facilitate the buyers of the vehicles, check delays and errors and reduce their harassment. In terms of the scheme, a buyer of the vehicle was required to deposit the registration fee with the dealer selling the vehicle, who in turn was to deposit the same with the Transport Department online on Vahaan portal”, the Advocate Vishal Goel, counsel for Jammu Automart Pvt Ltd submitted.
After the increase of token tax, the petitioner continued collecting that amount from the buyers on the cost of the vehicles and deposit the same with the department. “As principally no tax on tax can be levied, the amount of ad-valorem fee was calculated on the price of the vehicle excluding the GST portion thereof and the same was deposited with the treasury online with no objection raised”, it was further submitted.
The system was followed like this till such time a clarification was issued by the Transport Department vide Government Order dated November 26, 2019 clarifying that the token tax has to be calculated on the basis of cost plus GST. More than six months thereafter, communication dated June 22, 2020 was received from the RTO Jammu directing the petitioner to deposit the differential tax for the period from August 1, 2019 to November 25, 2019.
“The clarification issued by the department has put liability on the petitioner with retrospective effect even through the basic liability to pay token tax is not of the petitioner as such the notice issued is totally without jurisdiction”, the counsel for the petitioner submitted.
After hearing counsel for the parties and perusal of the relevant record, the DB observed, “the liability to pay the tax is on the registered owner or the person who has the possession of the vehicle and not that of the seller of the vehicle”, adding “the fault cannot be attributed to the petitioner for the reason that even the invoice was to be generated from the Vahaan portal as per the Government order dated October 12, 2017”.
“The authorities themselves were not clear and accepted the amount of token tax on the cost of the vehicles excluding GST”, the DB said, adding “any clarification issued by the Government cannot have retrospective effect”.
Accordingly, the DB set-aside the impugned notices directing the petitioner to deposit the differential amount of tax for the period from August 3, 2019 to November 26, 2019.
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