2% Additional Tax For Acquiring 'Second Vehicle' Can't Be Levied When First Vehicle Has Already Been Sold: Telangana High Court

As per the Telangana Motor Vehicles Taxation Act, 1963, vehicles that cost over Rs 20 lakh will be charged 18%. A second vehicle purchased in the name of the owner will be charged an additional 2% tax.

Justice Nagesh Bheemapaka clarified that the additional tax on a second vehicle is applicable only if an individual owns two vehicles at the time of registration of the new vehicle (not at the time of its purchase). It observed,

“petitioner annexed the copy of screenshot evidencing transfer of [first] vehicle to a third party as material papers. Hence, it can safely be said that tax [on new vehicle] should be levied at 18% only.”

The Petitioner had paid Rs. 4,31,820/- as vehicle tax, which is 18% of the ex-showroom price.

However, when it approached the RTO to complete the registration process, he was informed that an additional tax is required to be paid since his new vehicle is a 'second vehicle' and as per provisions of the Telangana Motor Vehicles Taxation Act, an additional 2% tax was applicable for the second vehicle.

Petitioner claimed that his previous vehicle was sold prior to seeking registration of the new vehicle and hence, additional 2% tax should not apply, as he did not own any other vehicle at the time of registration.

He argued that additional 2% tax under Schedule-VII of the Act is only applicable if the individual owns more than one vehicle at the time of registration, not at the time of temporary registration.

Agreeing, the High Court cited Rohit Nayani v. The State of Telangana, which clarified that date of physical registration is relevant for imposition of taxes, not the date of temporary registration.

“There is clear distinction between the temporary licence and permanent registration. When the Act/Schedule states 'at the time of registration of new vehicle', the same has to be interpreted to mean at the time the vehicle is physically presented before the T.T.A. Office for the purpose of registration. Temporary licence is generated on line by the dealer and it is only a licence to drive the vehicle for a period of 30 days from the date of delivery by the dealer, by no stretch of imagination can it be contended that the date on which what temporary licence is generated by the dealer should be taken as the date of registration,” it was held therein.

Accordingly, the High Court directed the RTO concerned to register Petitioner's vehicle without insisting on an additional tax amount in addition to what has already been paid by him.

Appearance: Advocate A. Giridhar Rao for Petitioner; Govt pleader M. Vigneshwar Reddy for Respondents

Case title: Aloor Venkat Rohan Rao v. State of Telangana & Ors.

Case no.: WRIT PETITION No. 33567 OF 2024