We are pleased to
present a Tax Alert on the Karnataka High Court decision in the case of M/s.
Mandovi Motors Pvt. Ltd. vs The State of Karnataka
[2014-VIL-329-KAR].In this revision petition, the Karnataka High Court
has upheld the review order of the Karnataka Appellate Tribunal.
The High Court held that the benefit of concessional rate of VAT under Notification No. FD 300 CSL 2005 dated 24 October 2005 of the Karnataka VAT Act, 2003, is available only for sale of used cars and would not apply to sale of demo cars by the dealer. A brand new car purchased from the manufacturer and used for the purpose of demonstration cannot be treated as used car to be eligible for the benefit under the said Notification.
Since the VAT provisions with respect to sale of used cars (second hand cars) differ from state to state, the impact of this ruling, given in the context of Karnataka VAT Act, will have to be analysed accordingly
The High Court held that the benefit of concessional rate of VAT under Notification No. FD 300 CSL 2005 dated 24 October 2005 of the Karnataka VAT Act, 2003, is available only for sale of used cars and would not apply to sale of demo cars by the dealer. A brand new car purchased from the manufacturer and used for the purpose of demonstration cannot be treated as used car to be eligible for the benefit under the said Notification.
Since the VAT provisions with respect to sale of used cars (second hand cars) differ from state to state, the impact of this ruling, given in the context of Karnataka VAT Act, will have to be analysed accordingly
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