JAMMU, Jan 16: In an unjustified and unreasonable action, Road Tax is being charged on GST component of invoice value of motor vehicles in the Union Territory of Jammu and Kashmir in blatant violation of the notification issued by the Ministry of Road Transport and Highways (MoRTH) thereby creating undue financial hardship for the citizens.
In the Union Territory of Jammu and Kashmir the system for levy of tax for use of motor vehicles on public roads was revised vide SRO 492 dated August 1, 2019 and in supersession of the earlier rates the notification provided for payment of onetime tax at the rates specified—-for all motor vehicles (one time tax at the rate of 9% of the cost of the vehicle) and for motor cycles costing above Rs 1.50 lakh (one time tax at the rate of 10% of the cost of the vehicle).
Later, the Finance Department of J&K vide clarification dated November 18, 2019 ordered that Road Tax is to be levied on the aggregate cost of vehicle which includes both “basic cost plus GST” and in the light of this clarification, the Transport Department is charging one time Road Tax at the time of registration of vehicles calculating the same on aggregate invoice value—the cost plus GST charged thereon.
“This practice is in vogue even after the issuance of notification by the Ministry of Road Transport and Highways dated August 26, 2021 wherein it is mentioned that in case of fully built non-transport vehicles, the motor vehicle tax shall be calculated electronically through the portal on the basis of invoice price excluding Goods and Services Tax (GST)”, official sources told EXCELSIOR, adding “this notification clearly shows the intention of the Government of India not to levy motor vehicle tax on GST component”.
Moreover, in several States and UTs of the country like Punjab, Gujarat, Sikkim, Pondicherry, Arunachal Pradesh and Mizoram the Road Tax is being charged on basic cost of the vehicle only and not on GST component of invoice value, they further said.
“The levy of 9% and 10% Road Tax on GST component has raised concerns among the taxpayers as this has led to a situation where tax is being levied on tax effectively creating a “tax on tax” scenario, which appears to be unfair”, experts in the automobile industry told EXCELSIOR, adding “the additional financial strain created by levy of Road Tax on the GST paid on cost of the vehicle is exacerbating the cost of operations and impacting the prices of goods and services, which ultimately is burden on the end consumers”.
They said that Union Territory of Jammu and Kashmir with its challenging terrain has long struggled with infrastructure issues. “Vehicle owners are already facing difficulties due to high cost of vehicle, high fuel prices, high maintenance costs and long travel distances and levy of Road Tax on GST component is putting more burden particularly for those residing in remote and border areas where own mode of transportation is essential for availing various Government services”, they added.
When contacted, some officers in the Transport Department, while wishing anonymity, said, “we have received representations in this regard from various quarters and after examining the same the Administrative Department has approached the Finance Department”. “We are still awaiting response from the Finance Department in this regard”, they further said.
However, sources stressed that Finance Department should take a decision on the representations as early as possible so as to bring an end to the unjustified and unreasonable practice and to ensure compliance of the notification of the Ministry of Road Transport and Highway.
