New Delhi: In an order that will be welcomed by industry, the Supreme Court has ruled that owners will not have to pay motor vehicle tax for vehicles used exclusively inside factories, mines or stockyards.
The Bench of Justice Manoj Misra and Justice Ujjal Bhuyan noted that motor vehicle tax is compensatory in nature and if a vehicle is not used or kept for use in a ‘public place’, then its owner should not be made to pay it.
The Court passed this order after hearing an appeal against an Andhra Pradesh High Court order.
“Motor vehicle tax is compensatory in nature. It has a direct nexus with the end use. The rationale for levy of motor vehicle tax is that a person who is using public infrastructure, such as, roads, highways etc has to pay for such usage,” the Apex court said.
Referring to section 3 of The Andhra Pradesh Motor Vehicle Taxation Act, 1963, the bench said the legislature has consciously used the expression ‘public place’ in this provision. Section 3 of the Act deals with levy of tax on motor vehicles.
“If a motor vehicle is not used in a ‘public place’ or kept for use in a ‘public place’ then the person concerned is not deriving benefit from the public infrastructure; therefore, he should not be burdened with the motor vehicle tax for such period,” the Court observed.
“The tax is on the use or intendment for use of motor vehicle in a ‘public place’. Thus, if a vehicle is actually used in a ‘public place’ or kept in such a way that it is intended to be used in a ‘public place’ then the tax liability accrues,” the Bench added.
The Court was hearing an appeal by a company, the vehicles of which are confined for use within the Rashtriya Ispat Nigam Limited (RINL) premises in Visakhapatnam. The Bench said in this case, the vehicles in question were used or kept for use only within the restricted premises of RINL which was not a ‘public place’.
“Therefore, the said vehicles are not liable to be taxed for the period the said vehicles were used or kept for use within the restricted premises of RINL,” the Court said.
It noted the firm was awarded a contract in November 2020 for handling and storage of iron and steel materials at central dispatch yard within Visakhapatnam Steel Plant, Andhra Pradesh, a corporate entity of RINL. The Bench said the company deployed 36 motor vehicles for plying within the central dispatch yard premises.
The firm told the Apex court that the central dispatch yard was enclosed by compound walls and ingress and egress was regulated through gates where Central Industrial Security Force (CISF) personnel were deployed and no member of public has any right to access it.
The issue arose after the firm requested the Andhra Pradesh authority for exemption from payment of motor vehicle tax for the period its vehicles were confined and used within the central dispatch yard premises. The bench noted this request was made in terms of section 3 of the 1963 Act.
Later, the matter reached the high court where a single judge held that the firm was plying its vehicles within the central dispatch yard which is not a ‘public place’. The single judge directed the state authorities to refund Rs 22,71,700 to the company. Thereafter, the authorities challenged the order before a division bench which set aside the single judge’s order.
