Refund excess tax charged on vehicle registration: Punjab and Haryana High Court to Chandigarh Administration

The Punjab and Haryana High Court has ruled that the owner is required to pay tax on the price he paid for the vehicle and not on post-purchase increase reflected in the Vahan portal. The Bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth also directed the Union Territory of Chandigarh to refund the excess tax charged from the owner.

The ruling came on a petition filed against UT and other respondents by Alankar Narula through advocates Rana Gurtej Singh and Nikhil Goyal for registering the vehicle “subject to deposit of 6 per cent road tax” on the invoiced amount.

The Bench, during the course of hearing, was told that the petitioner purchased a new vehicle for an actual price of Rs 19, 79,054. He applied for vehicle registration on June 10, 2022. But the vehicle’s price increased and the actual price reflected on the Vahan portal was Rs 20, 16,892, resulting in the demand of 8 per cent motor vehicle tax instead of 6 per cent applicable to a vehicle costing less than Rs 20 lakh.

The Bench observed that the petitioner was asked to deposit 8 per cent of the vehicle price, following which he preferred the writ petition. The court, vide its interim order, directed that the petitioner “may” deposit tax at the rate of 8 per cent, subject to the final outcome of this writ petition.

The Bench asserted the State authorities pointed out that they were unable to charge tax at 6 per cent, since the value being shown on the portal was higher “after the change of price accrued in between”. It was added that the cost was “reflected at the level of the Central Government and the State was not authorised to tinker with the portal”.

The Bench asserted: “While we do not propose to interfere with the method and manner in which the portal reflects the price of the vehicle and the same is PAN India would apply to all people, who may apply for temporary registration as well as for permanent registration, if the price increased.

Considering that in the present case, the petitioner should have been allowed manually to pay the registration charges as per the original price, which he had paid for the vehicle, which was less than Rs 20 lakh. We allow the petitioner to claim refund of the excess tax, which he has paid,” the Bench asserted.