In an interesting case regarding whether GST should be charged, field formations have sought clarity from the Finance Ministry on whether fancy number plates or registration numbers of choice issued for vehicles by state transport authorities should be treated as a luxury and therefore subject to GST.

According to sources, "Field formations have written to the Central Board of Indirect Taxes and Customs (CBIC) seeking clarity on GST applicability for such fancy number plates."

Field formations are the offices of central government authorities based in each state and zone, responsible for tax collection, implementing tax laws, and interacting with taxpayers—in other words, the foot soldiers of the tax administration at the centre.

Sources say that these “field formations are of a view that fancy number plates are luxury and should be under the GST net.”

In a recent development, sources added, the Central GST Authorities—Delhi North Zone—issued a show-cause notice to the Delhi Government's Transport Authority, seeking GST dues on fancy number plates auctioned by them.

According to communications sent by the field formations to North Block, sources say, "State transport authorities sell fancy number plates via auctions. Some states have been collecting 18% GST on the final auction price paid by consumers but not remitting the same. In some cases, people bid for fancy or special numbers at a heavy premium as there is no ceiling price for the auctions. Thus, the premium payment is a luxury and should be taxed at 28%." These formations are seeking clarity from the Finance Ministry.

At present, states hold the view that the number plates issued by them are exempt from GST.

There have been instances where fancy number plates or registration numbers of choice for vehicles have been auctioned for several lakhs of rupees.

"In some cases, these fancy number plates, such as single-digit numbers like 0007 or 0001, have been auctioned for over ₹20-30 lakhs," sources added.

It will be interesting to see how the Delhi government responds to this show-cause notice. Will the Finance Ministry provide clarity to all field formations to start taxing this luxury at 18% or 28%? And how will this proposal be received by state transport authorities and those who bid for such fancy number plates?