SC: No Motor Vehicle Tax If Vehicle Not Used or Kept for Use in Public Place

The Supreme Court has ruled that owners cannot be compelled to pay motor vehicle tax if their vehicles are not used in or kept for use in a “public place.” According to media reports, the Court emphasized that the levy is compensatory in nature and directly tied to the benefit of public infrastructure such as roads and highways.

The ruling came in an appeal arising from an Andhra Pradesh High Court order, reported LiveLaw and other legal news outlets. A Division Bench of Justice Manoj Misra and Justice Ujjal Bhuyan observed that the legislature had consciously used the term “public place” in Section 3 of the Andhra Pradesh Motor Vehicle Taxation Act, 1963. “If a motor vehicle is not used in a public place or not kept for such use, then the person concerned is not deriving benefit from the public infrastructure; therefore, he should not be burdened with tax for that period,” the judges held, as cited in reports.

Case Background

As per media accounts, the appellant company owned heavy lifting vehicles used for logistics within Visakhapatnam Steel Plant, operated by Rashtriya Ispat Nigam Limited (RINL). The company informed the Transport Department that these vehicles were confined to the plant premises and sought exemption from motor vehicle tax under Section 3 of the Act.

Despite this, officials raised a demand of ₹7,37,960, followed by another demand of ₹15,33,740. Reports note that the company paid a total of ₹22,71,700 under protest. While a Single Judge of the Andhra Pradesh High Court later ordered refund of the amount, a Division Bench overturned that decision. This led the company to approach the Supreme Court.

Court’s Reasoning

Media reports highlight that the apex court clarified that the taxable event under Section 3 arises only when a vehicle is used or kept for use in a public place. Vehicles confined to a restricted industrial premises, such as RINL’s yard, do not fall within this scope.

The Bench also addressed Rule 12A of the Andhra Pradesh Motor Vehicles Taxation Rules, 1963. Reports quote the judges as saying that a rule cannot go beyond the ambit of its parent statute and must be read harmoniously with Section 3. Thus, the words “kept for use” in Rule 12A must be understood as “kept for use in a public place.”

The Court further held that the absence of formal intimation of non-use under Rule 12A could not justify tax liability when the vehicles were never used outside the restricted premises.

Verdict

On this basis, the Supreme Court set aside the Division Bench order of the Andhra Pradesh High Court and restored the Single Judge’s ruling directing refund of ₹22,71,700 to the appellant, as reported across multiple legal news platforms.