Transport dept suffers loss due to misclassification of contract carriage vehicles

The Motor Vehicle Act redefines private service vehicle (PSV) as one that can carry more than six passengers, used to carrying persons in connection with its owner’s trade or business. In contrast, contract carriage is a vehicle for hire to carry passengers and is engaged under a contract.

The government had clarified in September 2002 that PSV permits to leased vehicles owned by companies stipulated that the latter should enter into an agreement with the owner and take the vehicle on lease. There should be a lease deed and the lessee should pay taxes, fees, penalties, fines, damages, insurance claims and other necessities and requirements, the report noted.

“During test check of records relating to 481 out of a total 1,902 PSVs, audit noticed in the offices of RTOs at Ambattur and Tambaram that permits were issued to five motor vehicles classifying the same as PSV vehicles based on the agreement entered into between the companies and the original owners of the vehicles,” it said. The vehicles were paying a tax of Rs 500 per seat per quarter for PSV, which should have been Rs 3,000 per seat per quarter as fixed for contract carriages.

It also highlighted loss of tax due to misclassification of PSVs as educational institutions vehicles. Also, non-realisation of various taxes from maxi cabs, goods vehicles, old tourist motor cabs, and construction equipment vehicles has led to under assessment to the tune of Rs 4.05 crore, the CAG added.