2013 (8) TMI 864 - HC - VAT and Sales Tax

Does the purchase value of a vehicle, for the purpose of levy of tax under the Kerala Motor Vehicles Taxation Act, include the tax suffered under the Kerala Value Added Tax Act - Held that - If the purchase value of any vehicle is not ascertainable on account of non-availability of the invoice, the purchase value shall be the value or price at which the vehicle of like kind or same specifications is already registered or available with the manufacturer, or as fixed by the Customs and Central Excise Department for the purpose of levying customs duty, as the case may be. This provision, incorporated as a proviso to section 2(e) provides abundant intrinsic statutory material to understand the term purchase value as defined in section 2(e), beyond any shadow of doubt. The purchase value can never be determined by adding on the VAT component or any customs duty or other charges, over and above the value or price of the vehicle. This is how the purchase value has to be determined for the purpose of levy of tax under the proviso to section 3(1) of the MVT Act, to the extent such levy is dependent on the Schedule to that Act, prescribing the rate of one time tax, on the basis of the purchase value of the vehicle. - tax that could be levied under the MVT Act for the vehicle covered by the invoice which is exhibit P2 in the writ petition from which this appeal arises shall be determined applying the rate applicable in terms of that Act, on ₹ 8,81,004.41, which is the purchase value of that vehicle - Decided in favour of assessee.

Summary

Issues:
Interpretation of "purchase value" under Kerala Motor Vehicles Taxation Act for levy of tax including VAT component.

Analysis:
The main issue in this case revolves around determining whether the purchase value of a vehicle, for the purpose of tax levy under the Kerala Motor Vehicles Taxation Act, includes the tax suffered under the Kerala Value Added Tax Act. The appellant purchased a vehicle with VAT levied, and the authority under the Motor Vehicles Taxation Act insisted on adding not only the VAT component reflected in the retail invoice but also an additional component towards VAT attributed to the revision of the VAT rate. The challenge to this demand was initially rejected by the learned single judge, who emphasized the relevance of the date of registration under the MVT Act.

In the appeal, it was argued that the levy should only be on the purchase value of the vehicle, excluding VAT or any other tax, based on the definition of "purchase value" in the MVT Act. The appellant contended that the VAT component should not be part of the purchase value for determining tax under the MVT Act, citing provisions of the Sale of Goods Act, the Constitution, and the Kerala Value Added Tax Act. On the other hand, the Government Pleader argued that the amount paid by the end-consumer should be considered as the basis for tax levy under the MVT Act.

The court referred to the statutory provisions, specifically section 2(e) of the MVT Act defining "purchase value" as the value shown in the original purchase invoice. The court emphasized that when a statute defines a term, that definition is restrictive and no other meaning can be assigned to it. The court further clarified that if the purchase value is not ascertainable, it should be determined based on similar vehicles' values or prices. The court concluded that the purchase value cannot include VAT or any other charges beyond the vehicle's value, as per the proviso to section 3(1) of the MVT Act.

As a result, the court declared that the tax under the MVT Act for the vehicle in question should be determined based on the purchase value without including the VAT component. The competent authority was directed to accept the appellant's registration application based on this declaration, and any demand contrary to this decision was quashed. The writ appeal was ordered accordingly, overturning the previous judgment.