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Kasun Tharaka

Problem Regarding "semi Luxury Tax"

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Dear Friends,

I recently (2 weeks ago) bought a Toyota Vigo Smart Cab and went to do the insurance company to get the insurance done. They have issued a cover note and keep delaying printing the Insurance card. When I inquired, they said that my vehicle have due Semi Luxury Taxes which are not paid for 2 years and due to that they cannot give the insurance card until I clear the taxes.

However, this vehicle was insured with j********i Insurance under the 1st owner. they have paid taxes for 3 years which is for 2011, 2012 and 2013. After that j********i has not collected the taxes for 2014 and 2015 claiming that there was a government circular which exempts the Semi Luxury taxes on Dual purpose Single Cabs with effect from 1st January 2013.

Now when I check with Department of Motor Traffic (DMT) , they say that the vehicle have overdue taxes and the I should pay the respective taxes. My questions are:

1. Is the Semi Luxury tax still applicable for Vigo Smart cab?

2. The said circular says if the vehicle is Dual Purpose Single cab (Yes my cab is resisted under this category) and if it is has only driver cage (1 seat other than driver as per the CR) and the gross weight is below 3500 Kg (mine is 2665 Kg), how can DMT say that I have to pay the Semi luxury tax?

3. If there are unpaid taxes existed, is it possible to transfer the ownership of the vehicle without charging the applicable taxes from the previous owners? (I am the 3rd owner and two successful transfers was happened)

Do anybody came across a situation like this? please share your ideas coz now the new insurance people refusing to issue the insurance card to me because of this. Smart Cab owners please help me to get a clear idea about this.

Thanks in Advance

Kasun W

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Now when I check with Department of Motor Traffic (DMT) , they say that the vehicle have overdue taxes and the I should pay the respective taxes. My questions are:

1. Is the Semi Luxury tax still applicable for Vigo Smart cab?

2. The said circular says if the vehicle is Dual Purpose Single cab (Yes my cab is resisted under this category) and if it is has only driver cage (1 seat other than driver as per the CR) and the gross weight is below 3500 Kg (mine is 2665 Kg), how can DMT say that I have to pay the Semi luxury tax?

3. If there are unpaid taxes existed, is it possible to transfer the ownership of the vehicle without charging the applicable taxes from the previous owners? (I am the 3rd owner and two successful transfers was happened)

1. If RMV says you have to pay semi-luxury tax, then you have to pay. You will also have to pay a 50% fine on back-taxes. Arguing with them is like arguing with a brick wall. Let us know if you succeed.

2. Luxury taxes are not calculated by the brand-name of the weight of the vehicle but by the category (dual purpose) and engine capacity. Yes, certain BMWs and certain Mercedes' are exempt from luxury tax while certain Hyundai and Kia owners have to pay luxury tax. It's the law and the law is an ass. Again, you may argue with a brick wall as much as you like.

3. Legally, you can't transfer until the luxury taxes are paid. To my knowledge, some discrepancies happened in this regard in the past but now they are very strict about it.

Bottom line is you inherited the luxury tax problem. There's only one way out.

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Dear Crosswind,

Thank you for taking time for replying this. Actually today I wend to DMT and asked about this since I have some known officers there. They have asked this from several branches. Some says Yes you have to pay. But some says according to the circular and the attributes in my CR, you don't have to pay. At least inside the DMT there are contradictions about this.

People who say that I have to pay, are telling that the Vigo has 4 doors so you have to pay. That means CR should reflect it by saying the number of seats without driver are 3. But my CR clearly says No of seats without Driver is ONE !. If my cab have to have 4 seats, then it should be registered as a Double Cab. They say that Vigo Smart cab is a double cab. So how the hell is that got registered as a Single cab? When I asked this, they do not give an answer.

I understand your point that arguing with them is like arguing with a brick wall. Even brick wall answers, DMT wont answer. But I think I should take this up because this can affect to plenty of smart cab owners in this in this country if I succeed through this. Yes yes I know :D but I will at least give a try :D

Ater all, Hats off for the statement you made. "It's the Law and the Law is an Ass" made my day :D :D :D

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There was a past issue I recall, where smart cabs were imported as single cabs due to a loophole in the system. Sometime later, the customs and RMV got smart and changed the category of smartcabs. I think it may be possible that your cab was brought in before the change was done.

Did you go to the luxury tax department ? Its on the first floor, turn left from the stairs and then turn right. You will see a board saying "Luxury tax department". They are the final authority on luxury tax.

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Dear Crosswind,

YOM of my cab is 2010 and registered in 2011. Anyway it's under Single Cab category.

No I did't went to the Luxury tax department. But my friend there was calling all the divisions and trying to get a clear answer. but the answers we got are contradicting. However, I will go and discuss with Luxury Tax department. Thanks for the tip.

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Arguing with the DMT might be akin to talking to a brick wall, but that does not mean you shouldn't. When you go, you should take the afore mentioned circular and all the relevant documentation, and present your case on facts alone.

In Sri Lanka there is rarely consistent policy. Most policy is conjured up on a whim by politicians, many of whom have failed to clear O/Ls. So this is to be expected. They say one of the reasons behind the success of China is that the vetting process to become a political leader is so stringent, the popular idiots fall by the wayside. Anyway thats beside the point.

What you have to check if the circular you have is current and has not been withdrawn or over ruled by another circular.

You do have legal remedies, but it might not be worthwhile if the amounts in question are small, and also cause a delay in obtaining insurance so you can run the car. You might be able to get an injunction from a judge suspending the tax due until the case is over and instructing the insurance company to issue the insurance certificate. Then you are stuck with the car until the case is over, so its a bit messy.

The comissioner and deputy comissioners in the past have been reasonable people. You have to approach the issue carefully and reasonably and see if you can come to a settlement.

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Dear Don,

Appreciate your words. As a citizen, I have a right to get clarified why I should pay taxes when there are mismatches like this. On the other hand, DMT has done a big mistake by transferring the CR (twice !!! not once) if they claim that this vehicle have due taxes. It is absolutely not fair DMT to ask me to pay the due taxes for past years which I was not the owner of this vehicle at that time.

Yes If the tax is applicable, I will pay it definitely for the period I'm using this vehicle (2015 onwards) but I am not ready to pay taxes for the period which somebody else was using the vehicle.

I agree with you Don. The commissioner and Dep commissioners in the past were reasonable people. I personally do know that. Anyways I will at least give a try with present people as well :D

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Hi Friends,

Case resolved. But as Crosswind and Don said, I had to pay the tax :speechless-smiley-004:

However as a result of my reply letter to them, they have decided to waive off 90% from the penalty. But they do not provide clear answer to my question regarding how my cab got transferred with due taxes. However I didn't want to drag this further coz it is huge time waste.

BTW, former insurance (j********i) company (who is responsible to collect that tax from the customer) have had a meeting with them. As per them, DMT admits that there are loopholes in the circular which they have issued on 2013 and they will take actions to re-issue the circular to all insurance companies very soon.

BUT

in the end, I paid the tax :sad-smiley-066:

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Thanks for reverting back with your feedback. It's always good not to have open ends in any forum discussion.

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http://www.motortraffic.gov.lk/web/index.php?option=com_content&view=article&id=93:luxuries-tax-&Itemid=126〈=en is quite clearly stating that even dual purpose vehicles are subject to luxuries tax but under a separate category called dual purpose semi luxury tax. Bdw Kasun was it this dual purpose category that you were subjected to in the end?

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Hi Friends,

Case resolved. But as Crosswind and Don said, I had to pay the tax :speechless-smiley-004:

However as a result of my reply letter to them, they have decided to waive off 90% from the penalty. But they do not provide clear answer to my question regarding how my cab got transferred with due taxes. However I didn't want to drag this further coz it is huge time waste.

BTW, former insurance (j********i) company (who is responsible to collect that tax from the customer) have had a meeting with them. As per them, DMT admits that there are loopholes in the circular which they have issued on 2013 and they will take actions to re-issue the circular to all insurance companies very soon.

BUT

in the end, I paid the tax :sad-smiley-066:

Kasun you aren't the only one i'm afraid :(

I ended up having to pay the back taxes & penalty on a vehicle I purchased last year, despite the RMW transferring it to my name last year with no mention of taxes owed at the time. The issue cropped up when the gentleman i was selling it to (or rather his bank) attempted to affect the transfer.

After two days of jumping through hoops at the RMV (one day to ascertain the status & another day to beg for a concession on the penalty / final payment - despite the issue not being my fault at all seeing as the tax payment schedule should have been completed between 2004 ~ 2011 - with the vehicle coming in to my position only in 2014!)

It's a very long story(involved visiting SL I******* Head Office & c******o to try to track down tax payment receipts as the the letter of demand issued by the RMW) but the bottom line is that the insurance companies are at fault for not collecting the sum prior to issuing policies and the RMV as well for not tracking payments. Between the collective incompetence of both, those who find them selves carrying the can when the penny finally drops end up having to pay the piper.

It's sad how no amount of logic or reasoning will make the RMV see how unfair it is to penalize someone else when the actual offender is known - a foreigner with their typical high handed behavior (& subsequently admitted blatantly to flouting the law with some lame interpretation trying to deflect blame on to the insurance companies as well as the State for not collecting on the dues at the time!)

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Hi isurujosh

Yes. I was subjected to the Dual Purpose Semi Luxury Tax. The problem was that DMT issued a circular by waiving off that Semi Luxury tax from 1st Jan 2013 onward. The criterion were;

- Gross weight should be lower than 3500 Kg

- should be Dual Purpose

- should be a Single Cab

So All attributes were complied with my Hilux Vigo Smart Cab as per the CR. When I inquired they said that is not applicable to Hilux Smart Cab even I fulfill the requirement as per the circular and those are applicable only for Indian made Mahindra's and Tata Cabs.

Though I paid the tax in the end, DMT admitted that the circular has some loopholes and they will make necessary arrangements to re-issue the said circular with corrections.

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My goodness Kasun, you have been subjected to so many injustices here and I am sure if you were to put a human rights case then you'd win that. (Not that I encourage you to do so ?)

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Hi Devinda_Z

Yes you are absolutely correct. It is Insurance company's responsibility to collect the taxes (if applicable) for any vehicle. And DMT is easily washing their hands with the authoritative power they have. Even they are not ready to inquire how my vehicle got transferred TWICE when it has due taxes to pay. Disgusting !!!

But in my case, the former insurance company have been paying the taxes and suddenly stopped due to a circular issued by DMT. The problem is that the said circular is wage and because of that any party can define it with their own way due to lack of information. So DMT have admitted that there is a problem and they will issue a new circular soon.

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Hi Devinda_Z

Yes you are absolutely correct. It is Insurance company's responsibility to collect the taxes (if applicable) for any vehicle. And DMT is easily washing their hands with the authoritative power they have. Even they are not ready to inquire how my vehicle got transferred TWICE when it has due taxes to pay. Disgusting !!!

But in my case, the former insurance company have been paying the taxes and suddenly stopped due to a circular issued by DMT. The problem is that the said circular is wage and because of that any party can define it with their own way due to lack of information. So DMT have admitted that there is a problem and they will issue a new circular soon.

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Hi Devinda_Z

Yes you are absolutely correct. It is Insurance company's responsibility to collect the taxes (if applicable) for any vehicle. And DMT is easily washing their hands with the authoritative power they have. Even they are not ready to inquire how my vehicle got transferred TWICE when it has due taxes to pay. Disgusting !!!

But in my case, the former insurance company have been paying the taxes and suddenly stopped due to a circular issued by DMT. The problem is that the said circular is wage and because of that any party can define it with their own way due to lack of information. So DMT have admitted that there is a problem and they will issue a new circular soon.

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Hi isurujosh,

Yes I know. That's why I fought to correct that issue at least. But in the other hand, going to courts for this kind of case can be painful and worse than paying the due taxes. :speechless-smiley-004:

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