Tax was being calculated on the discounted price of the vehicle instead of the MRP

The Transport Department has detected evasion of motor vehicle tax from the sellers and buyers of non-transport vehicles (cars and two-wheelers) by calculating the tax on the discounted price of the vehicle instead of the maximum retail price.

In a move to curb such evasion and to recover the dues, the department will conduct special audit inspections at some of the regional transport offices (RTOs) where large-scale irregularities were reported, including RTOs in Davangere and Chikmagalur.

Transport Commissioner T. Sham Bhat told The Hindu that the difference in tax amount would be collected from the vehicle owner.

He said the evasion could be to the tune of Rs. 1 crore across different RTOs in the State. Stringent audit inspections were the only way to detect such evasions, Mr. Bhat said. Though buyers of vehicles did not have a big role to play, the department may have to seize the vehicles if they failed to pay the difference in tax amount, he stated.

The Act

As per the provisions of the Motor Vehicles Act, motor vehicle tax has to be collected on the invoice price, which includes the manufacturer's selling price and different duties/ levies. However, clerical staff in some of the RTOs in collusion with dealers calculate the tax amount on the discounted price of the vehicle, well below the invoice price.

At the Chikmagalur RTO, tax evasion could be to the tune of Rs. 15 lakh, sources in the department said. This was due to the involvement of staff working in the non-transport section for the last several years, they added.

Added to this, the office did not have sufficient ministerial staff after some staff members were sent on deputation.

After the evasion was detected, the Accounts Superintendent too has gone on deputation, the sources said. The department was in the process of calculating the amount of evasion at the Davanagere RTO, the sources added.

Dealer's view

One of the automobile dealers in Bangalore said that they wanted tax to be calculated on the actual price for which the vehicle is sold.

“We intended to pass on the benefit to the customer. However, the Transport Department is not yielding to this request,” he said.

Department sources said calculating motor vehicle tax on the discounted price would lead to confusion as a dealer might offer varied discounts to different customers for the same category of vehicle.

In such a situation, calculating and levying different tax amounts would be difficult.

Moreover, audit objections would be raised by the Comptroller and Auditor-General, they said.