Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-003352-003353 – 2017 |
| Diary Number | 37774/2012 |
| Judge Name | HON’BLE MR. JUSTICE PANKAJ MITHAL |
| Bench | HON’BLE MR. JUSTICE PANKAJ MITHAL; HON’BLE MR. JUSTICE S.V.N. BHATTI |
| Precedent Value | Binding authority |
| Overrules / Affirms | Affirms Bolani Ores Ltd. v. State of Orissa [(1974) 2 SCC 777] |
| Type of Law | Taxation; statutory interpretation of Motor Vehicles Act and state tax statute |
| Questions of Law | Whether heavy earth-moving machinery or other off-road construction equipment qualify as “motor vehicles” under Section 2(28) of the Motor Vehicles Act, 1988, and are liable to tax under the Gujarat Motor Vehicles Tax Act, 1958. |
| Ratio Decidendi |
By construing Entry 57, List II, Seventh Schedule and Section 2(28) MV Act, the Court held that mechanically propelled vehicles “adapted for use upon roads” are included but that special-type vehicles “adapted for use only in a factory or enclosed premises” are excluded. Off-road construction equipment, even if transported on roads for deployment, falls within this exclusion. Section 3(1) of the Gujarat Tax Act levies tax only on motor vehicles as defined, and Schedule I prescribes no rates for such equipment. Consequently, state taxation cannot extend beyond constitutionally permissible vehicles suitable for road use. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
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| Facts as Summarised by the Court |
Appellant used dumpers, loaders, excavators, dozers, drills, rock breakers and surface miners exclusively within enclosed cement-plant premises. The RTO initially exempted them from registration (1996). A subsequent Transport Commissioner’s directive (1999) and show-cause notice (2006) sought registration and tax; appellant paid under protest and challenged in the Gujarat High Court, which upheld the demand. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts |
| Persuasive For | High Courts |
| Distinguishes |
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| Follows |
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What’s New / What Lawyers Should Note
- Clarifies that vehicles of a special type adapted solely for factory or enclosed-premises use are excluded from the MV Act’s definition of “motor vehicle” and cannot be taxed under state motor-vehicle tax laws.
- Holds that absence of any prescribed rate for construction equipment vehicles in Schedule I of the Gujarat Tax Act confirms their exemption.
- Confirms manufacturer and Automotive Research Association of India certificates on off-road design are relevant to determine exclusion.
- Affirms the binding nature of the MoRTH circular (13.07.2020) clarifying that off-road equipment does not qualify as “motor vehicle” for registration, consistent with K.P. Varghese v. ITO [(1981) 4 SCC 173].
Summary of Legal Reasoning
- Article 265 and Entry 57, List II, Seventh Schedule authorize state taxation solely of vehicles suitable for use on public roads.
- Section 3(1) of the Gujarat Tax Act levies tax on “all motor vehicles used or kept for use,” but must conform to constitutional competence.
- Section 2(28) MV Act includes mechanically propelled vehicles adapted for roads but expressly excludes special-type vehicles adapted only for factory/enclosed premises.
- Rule 2(cab) CMV Rules defines “construction equipment vehicle” as off-highway machinery, reinforcing its special-type status.
- Schedule I to the Gujarat Tax Act lists no tax rates for construction equipment vehicles.
- Bolani Ores Ltd. holds that vehicles not using public roads cannot be taxed; this was reaffirmed.
- Decisions imposing tax on off-road machinery without addressing Section 2(28)’s exclusion are distinguished.
Arguments by the Parties
Petitioner (Appellant)
- Off-road construction equipment vehicles are not “motor vehicles” under Section 2(28) MV Act, as they are adapted exclusively for use within factory/enclosed premises.
- Manufacturer and Automotive Research Association of India certificates prove off-road design and lack of road-worthiness certification.
- MoRTH circular (13.07.2020) classifies such machinery as off-road equipment not requiring MV Act registration.
- Bolani Ores precedent bars taxation of vehicles that do not ply on public roads.
Respondent (State of Gujarat)
- Section 3(1) Gujarat Tax Act imposes tax on all motor vehicles used or kept in the State, without reference to road suitability.
- The state levy is valid despite absence of “suitable for use on roads” in the charging provision.
- MoRTH circular lacks statutory rule-making authority and is not binding; it operates prospectively.
- Division-Bench decisions (e.g., Chief General Manager, Jagannath Area; State of Gujarat v. Akhil Gujarat Pravasi) support taxation of heavy machinery.
Factual Background
The appellant, a cement manufacturer, operated heavy earth-moving machinery—dumpers, loaders, excavators, dozers, drills, rock breakers and surface miners—exclusively within enclosed plant premises in Gujarat. A Regional Transport Officer initially exempted these off-road vehicles from MV Act registration in 1996; in 1999 the Transport Commissioner directed their registration and assessed road tax under the Gujarat Tax Act. The appellant obtained manufacturer and expert certifications of off-road use and challenged the demand. After a show-cause notice demanding over Rs. 59 lakhs, the appellant registered the vehicles and paid Rs. 88.45 lakhs under protest. The Gujarat High Court dismissed the quashing petition, holding the equipment taxable as “motor vehicles.”
Statutory Analysis
- Article 265, Constitution: No tax without authority of law.
- Entry 57, List II, Seventh Schedule: Permits tax on vehicles “suitable for use on roads.”
- Section 3(1), Gujarat Motor Vehicles Tax Act, 1958: Charges tax on “all motor vehicles used or kept for use,” subject to Schedule I rates.
- Section 2(10), Gujarat Tax Act: Adopts MV Act definitions for undefined terms.
- Section 2(28), Motor Vehicles Act, 1988: Defines “motor vehicle” inclusively as road-adapted machines, then excludes special-type vehicles for factory/enclosed premises.
- Rule 2(cab), CMV Rules: Defines “construction equipment vehicle” as off-highway machinery for industrial use.
- Schedule I, Gujarat Tax Act: Specifies tax rates; no rate exists for construction equipment vehicles.
Dissenting / Concurring Opinion Summary
No separate dissenting or concurring judgments were filed; the verdict is unanimous.
Alert Indicators
- ✔ Precedent Followed – Reaffirms Bolani Ores Ltd. v. State of Orissa
- 🔄 Conflicting Decisions – Distinguishes Natwar Parikh & Co. Ltd. and Western Coalfields Ltd.