A major respite to leading vehicle dealers in city as the Nagpur bench of Bombay High Court has directed the authorities to maintain status quo about levying 12.5 per cent Sales Tax (VAT) on RTO registration charges, insurance premium charges and handling charges on vehicles sold during 2015-16. While issuing notice for final disposal tagged with another petition in which the authorities have promised to maintain the position existing as on July 16, 2020.
A division bench comprising Justice Ravi Deshpande and Justice N B Suryawanshi directed the authorities to maintain the position existing as on this date in the present matter. The petition filed by Unnati Vehicles Pvt Ltd, Cosmic Grace Auto India Pvt Ltd, Sudarshan Motors, Sequel Motors Pvt Limited and Eros Motors Pvt Limited challenged the final assessment order made against them under Section 23 of M a h a r a s h t r a Value-Added Tax Act, 2002 by the respondent assessing officers thereby including all surcharges and taxes as part of sales price. The vehicles were sold during 2015-16 and the orders were received recently to pay SalesTax on the RTO tax and registration charges, insurance premium charges and handling charges by treating the said charges as part of the sale price of the motor vehicle.
According to the petitioners, the impugned assessment orders are ex-facie bad in law and have been passed without jurisdiction. The Sales Tax assessment of vehicle dealers is done on their gross annual turnover of sales. But, recent show cause notice issued by the assessing officers have been initiated at a much belated stage by mechanically following the order of the Advance Ruling Authority dated June 20, 2018 under Section 55 of the MVAT Act. The authority took a view that VAT was leviable on RTO charges, insurance premium charges and handling charges as it formed part of the ‘sale price’. The order itself is bad in law and misinterprets the scope of term ‘sale price’ defined under Section 2(25) of the MVAT Act, the petitioners claimed. Besides, the order was passed during the period of national lockdown due to COVID-19 pandemic and huge liability was fastened on the petitioners by levying 12.5 per cent Sales Tax (VAT) on the RTO tax and registration charges, insurance premium charges and handling charges in respect of the sale of motor vehicles during the assessment period 2015-16. The taxes and insurance coverage are post-sale events and not part of sale price of the motor vehicle, the petitioners claimed.