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


The Mercedes dealership had billed the car at a discounted value & paid the registration & road tax on that amount.

BHPian nareshtrao recently shared this with other enthusiasts.

Hi 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 an agent for Hypothecation removal.

The agent called back and said that 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 tax on the list price. Hence, I am now liable to pay additional tax on the value of the car (per the 2019 price list) along with a penalty for 3 years.

I reached out to Akshaya Motors ownership and management seeking help in resolving the issue. They washed their hands off and said this is between RTO and me and they have no role to play.

My contention is that if they under-invoiced the car to offer me a discount, they could have been transparent and asked me to pay the full Road Tax if that was legally due. On the other hand, the question is how could RTO register the car for a lower value if that is what the rules said then. While I am fine to pay the tax difference, neither the RTO nor the Dealer is able to show any notice or circular to the effect that such a rule prevailed then. My other contention is that how am I liable to pay the penalty if the error was either at the Dealer’s end or at RTO’s end given that the car was indeed registered.

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

Any of you faced any such issue ever? Any guidance would be appreciated.

Here’s what BHPian Turbanator had to say about the matter:

Heard such a thing for the first time. Can you confirm if you have paid the RTO or the dealer directly and you paid to them? In most places, RTO was calculated at MRP and only in a few based on actual sale price. This practice of charging as per discounted rate was stopped sometime during 2018-19 if I am not mistaken everywhere and manufacturers had to update the prices in the Vahan portal.

If the RTO office has not sent you any demand all these years and the tax was paid by the dealer, you will need to involve the dealership in this as well. They can try using their contacts at RTO to convince or you can visit directly and meet someone senior. But if an amount is reflected in their system, this may not help and you will have to either pay or take the matter to the court.

Not a good situation to be in but you will need to take a call considering the total demand vs the time / money you will have to spend on legal recourse.

Here’s what BHPian PrideRed had to say about the matter:

I had this issue long ago. I don’t recall if it was under invoiced or an error by RTO. I did not calculate the amount while paying, however, it came to my notice a couple of months later and I realized I had paid lesser than what was mentioned in the brochure. I checked with RTO and the agent who washed off saying as long as I got a receipt, all is ok. A year down the line got a call from RTO saying they made a mistake and accounts are not tallying up. They agreed it was their mistake and were kind. Asked if I could pay the amount (around 4-5K) or else they would pool themself and pay. I paid the amount and also got a receipt.

This is my understanding – if the discount is from the dealer’s pocket, then RTO will have to tax on ex-showroom before discount, but if the discount is from the manufacturer, the discount is on ex-factory and hence lesser road tax.

Here’s what BHPian CrAzY dRiVeR had to say about the matter:

Karnataka RTO is very straightforward in this matter – You need to pay road tax on the actual price, and not the discounted price. (Unless the ex-showroom price is revised officially by the manufacturer and entered into their systems).

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

Here’s what BHPian androdev had to say about the matter:

Assuming that you got the tax paid receipt for the full amount you paid to the dealer, the only motivation of the dealer is to make a sale by offering an attractive on-road price.

Realistically speaking, I doubt either RTO or dealer will help you in this matter. They should but they won’t. You can request the RTO to lower the penalty – you surely have a case for the same. Given the behaviour of the dealer, you should register 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 have learnt not to be a crusader, or at least be selective.

Check out BHPian comments for more insights and information.


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