Saturday, July 25, 2009

No entry tax on vehicles bought outside the state

No entry tax on vehicles bought outside the state
HC Quashes Provisions, Orders Refund

Bangalore: Good news for vehicleusers. You don’t have to pay entry tax if you buy a motor vehicle outside the state and bring it into the state.
Not just that. If you have already paid the tax within a specified period, you are entitled for refund.
The Karnataka high court on Friday quashed the entry tax of 4% to 12% levied by the state government. The court declared as unconstitutional Section 4 B and 4BB of Karnataka Tax on Entry of Goods into Local Area Act, 1979(amended in 1994) that had provisions for levying entry tax on various types of motor vehicles purchased in other states and brought into Karnataka.
Justice N Kumar, who allowed nearly 150-odd petitions challenging the provision, asked the authorities to refund the tax collected under the said provision within four weeks’ time. The judge also quashed the July 26, 2003 notification which had sought for collection of tax retrospectively for the period Jan. 1, 2000 to March 31, 2002.
“The object of our Constitution makers was free movement and exchange of goods throughout India. It is essential for the economy of India and for sustaining improving living standards of its people. It should ultimately lead to one-country-one-people concept and economic benefit of the development should reach every citizen wherever he lives. The people of the state must sink and swim together. The long-run prosperity and salvation lies in union and not division. Economic unity is the main force for achieving cultural and political unity and stability and progress can be achieved only by demolishing artificial boundaries and barricades and should be sidelined,’’ the judge said.
What you PAID
State was levying 12% entry tax on cars, taxi cabs, scooters, motorcycles and jeeps
8% on earthmovers, dumpers, other-related vehicles
4% on tractors, other agri-related vehicles Entry tax or not, things stay same
Bangalore: The high court’s directive to abolish levy of entry tax charged on vehicles brought outside the state is not going to impact sales of cars here.
For one, with the introduction of uniform VAT, prices of cars across the country are more or less the same or come with marginal differences. This difference in pricing isn’t attributed to any specific state tax, but arises because of transportation charges and 2% CST (central sales tax) levy. CST is an inter-state tax charged on manufactured goods.
Simply put, a Toyota car will bear the cheapest exshowroom price tag in Bangalore as the car is manufactured here. But its ex-showroom price in New Delhi would include transportation cost as well as CST charge.
Similarly, Honda Jazz bears an ex-showroom price of Rs 7.15 lakh in Bangalore as against an Rs 6.95 ex-showroom price tag in New Delhi.
Second, it’s futile to buy a car elsewhere and drive it into Karnataka, for road tax in the state is supposed to be the country’s highest. Road tax on cars below Rs 5 lakh is roughly around 10.8%, and from above Rs 5 lakh it varies between 13.75% and 17.5%. The tax in New Delhi is 4% and in Kerala it’s 6%.
However, abolition of entry tax will benefit buyers interested in brands such as Volvo cars, Jaguar and Land Rover. At present, none of these brands has dealership in the city. So, if one has to buy these cars from any other state they would be subject
to entry tax. Court frowns on discriminating tax “Short circuit measures of imposition of tax will not work in the longer run. They are against the principles enunciated in Article 301 of free movement of goods and Article 304(a), which is against levying of any discriminating tax. A state cannot exercise legislative power contrary to constitutional scheme and take away the benefit accrued to common man,’’ Justice N Kumar of the Karnataka high court observed on Friday.
While quashing the entry tax on vehicles purchased from outside the state, Justice Kumar said: “If a state’s economy could be prosperous because of tax holidays and lower tax rates, it shows the maturity of the political leadership and vibrant tax planning and marshalling of resources of that state.
“It is worthy of emulation by neighbouring states by way of free flow of goods and commerce so that people of both states are benefited. Such benefits extend beyond the state boundaries.
“If such a policy results in depletion in revenue to adjoining states, they must wake up to the hard realities of life and reduce the tax burden and extend the same benefits to people of the state as the economy, revenue and state also should improve and arrest the trend of its people going to neighbouring states to purchase motor vehicles.’’


At Monday, July 27, 2009 at 2:56:00 PM GMT+5:30, Anonymous Anonymous said...

Great news guys! Thanks for posting.


At Monday, July 27, 2009 at 7:04:00 PM GMT+5:30, Anonymous Anonymous said...

I own a TN registration 2 wheeler. Does this article says that i do don't want to pay my Road Tax.???

Entry Tax & Road Tax...

I'm confused whether "Entry Tax" & Road Tax" are one and the same...?

Are they one and the same.? If not what's the difference...???


At Sunday, August 2, 2009 at 4:42:00 AM GMT+5:30, Blogger Unknown said...

wish to know why only for that period and why not for the full years where entry tax is paid


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