Panaji: Eight years after the state government granted tax exemption on a Mercedes Benz B 180 CDI to Domnic and Joan Ministries, and six years after the CAG pulled up the government for causing loss to the tune of more than Rs 3 lakh, the directorate of transport has withdrawn the tax exemption with retrospective effect.
The director of transport has observed that the “luxury car (at a cost of around Rs 30 lakh and an additional amount of Rs 30,000 paid towards choice number) appears to have been purchased by the trust only for the use of its members for conveyance and not for larger charitable purpose”.
The CAG had observed that the director of transport had been issuing notifications on a case to case basis by granting exemption to various charitable institutions.
The CAG had stated that the director of transport granted exemption to the trusts/societies “which could afford to purchase luxury vehicles and pay for choice registration numbers” and pointed out that it “defeated the intention of the (Motor Vehicles Tax) Rules”.
The government hasn’t issued any notification under Rules 22 (1) (xii) of the Motor Vehicles Tax Rules, listing eligible charitable institutions that are allowed such an exemption and has also not specified categories of vehicles that can be exempted, the CAG had stated.
“In the absence of such notification, the director of transport has been issuing notifications on case-to-case basis by granting exemption to various charitable institutions,” the report stated.
The law department had stated that the exemption is granted on a case-to-case basis solely on the ground that it is not in consonance to Rule 22 of the said rules where any trust involved in charity activities is concerned.
The directorate of transport issued a showcause notice on June 2, 2022 for revocation of the exemption, and counsel representing Domnic and Joan Ministries submitted that Rule 22 (1) (xii) doesn’t lay any specific qualification such as luxury or otherwise and added that the rules don’t provide for recovery of taxes where exemption has been granted.
“No doubt, the provision has no restriction. At the same time, such institutions are not imagined as the ones who will use this provision for exemption of MV tax to provide high-end vehicles for use of its office bearers. It is taxpayers’ money and one of the important sources of revenue. It is within the competence of the government to make correct interpretation of provision to prevent abuse and revert the decision if required,” Satardekar stated, adding that during the hearing, the party was silent and hasn’t clarified for what charitable purpose such an expensive car is needed.
The director of transport has observed that the “luxury car (at a cost of around Rs 30 lakh and an additional amount of Rs 30,000 paid towards choice number) appears to be purchased by the trust only for the use of its members for conveyance and not for larger charitable purpose”