No TCS to be Added to purchase value for calculation of Motor Vehicle Tax [Read Order]

The High Court of Kerala in the matter of DR.ANTONY DANIEL Vs. THE TRANSPORT COMMISSIONER has ruled out that No TCS is to be added to the purchase value for the calculation of Motor Vehicle Tax.

The present writ petition has been filed seeking the following reliefs:

“i) issue a writ of certiorari or any other appropriate writ or order, set aside Ext.P1 and P2;

ii) issue a writ of mandamus or other appropriate writ or order or direction, declaring that 1st petitioner is not liable to pay the additional tax as demanded in Ext.P1 and P2 in the light of the provisions of ‘Income Tax Act‘ and the ‘Kerala Motor Vehicles Taxation Act, 1976’ and Ext.P3 judgment of this Hon’ble Court.”

Learned counsel for the petitioner as well as the learned Government Pleader, fairly contended that the subject matter of the present writ petition is covered in favour of the petitioner, in view of the judgment of this Court in Paulose K.V. v. The Transport Commissioner [WP(C) No.33235/2017 & connected cases dated 2.8.2023], wherein, this Court, after considering the submissions of both sides and the provisions of Section 206C(1F) of the Income Tax Act, 1961 and Section 2(e) of the Kerala Motor Vehicles Taxation Act, 1976, held as under :

“10. If TCS to be included in the purchase value, as contended by learned Government Pleader, Smt.Reshmita Ramachandran, then the provisions of Section 2(e) would run contrary to the sub-section (1) of Section 206C of the I.T. Act. The Court has to give harmonious construction between the Central Act and State enactment. The Legislature to avoid this anomaly in the definition clause of the purchase value under Section 2(e) of the Kerala Motor Vehicles Taxation Act, 1976 by way of Amendment by Finance Act, 2020, added a proviso in Section 2(e) of the Kerala Act, specifically providing that TCS collected by the dealer would not include the purchase value of the vehicle. This Court is, therefore, of the view that proviso has to be treated as clarificatory.

11. In view thereof, present writ petitions are allowed, and the inclusion of 1% TCS on the purchase value is set aside. The petitioners are required to pay the motor vehicle tax on the purchase value excluding the TCS collected by the dealer. The demand notices, Exts.P3 and P4 in W.P.(C)No.6910/2019 and Ext.P4 in W.P.(C)No.21609/2019 are set aside. The Assessing Authority may redetermine the tax, if it so required, in the light of the observations made hereinabove.”

In view of the above, the present writ petition is also allowed in terms of the judgment dated 2.8.2023 in Paulose K.V.(supra) [WP(C) No.33235/2017 and connected cases]. Hence, Exts.P1 and P2 demand notices impugned herein are hereby set aside and the assessing authority may redetermine the tax, if it so required, in the light of the observations made by this Court in Paulose K.V.(supra).

Pending interlocutory applications, if any, in the writ petition would stand dismissed.

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