RTO demanding additional tax & penalty for the C-Class I bought in 2019

The Mercedes dealer had invoiced the car at a reduced value and paid the registration and road tax on that amount.

BHPian nareshtrao recently shared this with other enthusiasts.

Hello all,

I bought a C220d in March 2019 from Akshaya Motors, Bangalore. I completed my loan last month and sent the documents to RTO through a Mortgage Removal Agent.

The agent called back and said the dealer had billed the car at discounted value and paid registration and road tax on the discounted value. Instead, they should have paid the list price tax. Therefore, I now have to pay extra tax on the value of the car (according to the 2019 price list), along with a fine of 3 years.

I contacted Akshaya Motors ownership and management to seek help in resolving the issue. They have washed their hands and said this is between RTO and me and they have no part to play.

My contention is that if they had billed the car too low to offer me a discount, they could have been transparent and asked me to pay the full road tax if it was legally due. On the other hand, the question is how RTO could register the car for a lower value if that’s what the rules said back then. While I am in order to pay the tax difference, neither the RTO nor the Dealer can show any notice or circular that such a rule was then in effect. My other claim is that how am I liable for paying the fine if the fault was at the dealer’s end or at the end of RTO as the car was indeed registered.

Most importantly, the behavior of Akshaya Motors management in providing support or complete lack of it is absolutely appalling. Very rarely do we, the general public, deal with RTOs and the least I expected as a buyer of a premium car is that they will help.

Have any of you ever faced such a problem? Any guidance would be appreciated.

this is what BHPian Turbanator had to say about this:

Heard such a thing for the first time. Can you confirm whether you paid the RTO or the dealer directly and paid to them? In most places the RTO was calculated on the basis of MRP and only in a few places on the basis of the actual selling price. This practice of charging a discounted rate was stopped sometime in 2018-19 if I’m not mistaken everywhere and manufacturers had to update the prices in the Vahan portal.

If the RTO office has not sent you a reminder in all those years and the tax has been paid by the dealer, then you should also involve the dealer in this. They can try to convince through their contacts at RTO or you can drop by directly and meet a senior. But if an amount shows up in their system, it may not help and you will have to pay or take the case to court.

Not a good situation to be in, but you’ll have to make a phone call considering the aggregate demand versus the time/money you’ll have to spend on legal proceedings.

this is what BHPian Pride Red had to say about this:

I had this problem a long time ago. I can’t remember if it was under-billed or a mistake made by RTO. I did not calculate the amount when paying, but a few months later I found out that I had paid less than stated in the brochure. I checked with RTO and the agent who rinsed and said as long as I have a receipt everything is fine. A year later they received a call from RTO that they had made a mistake and that the accounts are incorrect. They agreed it was their fault and were nice. Asked if I could afford the amount (about 4-5K) or else they would bundle themselves and pay. I paid the amount and also got a receipt.

This is my understanding – if the discount comes out of the dealer’s pocket then RTO will have to charge ex-showroom discount before, but if the discount is from the manufacturer then the discount is ex-factory and thus lower road tax.

this is what BHPian CrAzY DRiVeR had to say about this:

Karnataka RTO is very simple in this matter: you have to pay road tax on the actual price and not on the discounted price. (Unless the ex-showroom price is officially revised by the manufacturer and entered into their systems).

The best solution would be that you pay the extra amount due and Akshaya Motors pay the penalty amount as that part is solely due to their mistake.

this is what BHPian androdeva had to say about this:

Assuming you got the receipt for the full amount you paid to the dealer, the dealer’s only motivation to make a sale is by offering an attractive price down the road.

Realistically I doubt that RTO or dealer will help you in this matter. They should, but they won’t. You can request the RTO to reduce the fine – you certainly have a case for that. In view of the behavior of the dealer, you should file a complaint with Mercedes.

I hope it’s a small amount. Pay it off and move on. It’s a bitter pill to swallow, but I’ve learned not to be a crusader, or at least to be selective.

Check out BHPian’s comments for more insights and information.

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