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 on all States and their authorities |
| Overrules / Affirms |
|
| Type of Law | Statutory interpretation – Motor Vehicles Act 1988 & Gujarat Motor Vehicles Tax Act 1958 |
| Questions of Law | Whether heavy earth-moving machinery or special service construction equipment vehicles (Dumpers, Loaders, Excavators, Surface Miners, Dozers, Drills, Rock Breakers) are “motor vehicles” within the ambit of Section 2(28) of the Motor Vehicles Act, 1988 and therefore subject to registration under Section 39 and taxation under the Gujarat Motor Vehicles Tax Act, 1958. |
| Ratio Decidendi | The definition of “motor vehicle” under Section 2(28) of the Act comprises an inclusive limb (“any mechanically propelled vehicle adapted for use upon roads”) and an exclusion (“vehicle of a special type adapted for use only in a factory or in any other enclosed premises”). Entry 57, List II, Seventh Schedule, read with Article 265, restricts States to tax vehicles “suitable for use on roads.” Section 3(1) of the Gujarat Tax Act cannot extend beyond that constitutional power. Off-road construction equipment vehicles—transported in knocked-down form, used exclusively inside plants, lacking road-worthiness certificates—fall within the exclusion. Schedule I to the Tax Act similarly prescribes no tax for such vehicles. |
| 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 | Ultratech Cement Ltd. operates two plants in Gujarat, using Dumpers, Loaders, Excavators, Surface Miners, Dozers, Drills, Rock Breakers exclusively within enclosed premises. RTO initially acknowledged no registration required; Transport Commissioner later directed their registration and tax payment under the Gujarat Tax Act. Appellant supplied OEM certificates and ARAI report confirming off-road use. On refusal to accept, a show-cause demanded ~₹59 lakhs plus interest and penalty; Ultratech deposited ~₹88 lakhs under protest. Gujarat High Court upheld taxation; Supreme Court allowed appeal. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All States and their Transport/Tax Authorities |
| Persuasive For | Other High Courts, State Governments |
| Overrules |
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| Distinguishes |
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| Follows |
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What’s New / What Lawyers Should Note
- Clarifies that vehicles of a special type designed exclusively for factory or enclosed premises use (off-road construction equipment) are expressly excluded from “motor vehicle” under Section 2(28) MVA.
- Reaffirms that States can tax only vehicles “suitable for use on roads” under Entry 57, List II, Seventh Schedule, and Article 265.
- Emphasizes that Section 3(1) of a State Tax Act cannot override the exclusion in the parent Motor Vehicles Act.
- Highlights the utility of OEM and expert certificates (e.g., ARAI) to establish off-road status.
- Confirms that Schedule I to the Gujarat Tax Act prescribing no rate for construction equipment vehicles forecloses taxation.
- Enables counsel to challenge tax demands on off-road equipment, even if previously registered under the MVA.
Summary of Legal Reasoning
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Constitutional Framework
- Article 265 prohibits taxation without authority of law.
- Entry 57, List II, Seventh Schedule empowers States to tax “vehicles… suitable for use on roads.”
-
Charging Provision vs. Constitutional Limit
- Section 3(1), Gujarat Tax Act levies tax on “all motor vehicles used or kept for use in the State.”
- A taxing statute cannot exceed constitutional competence (Entry 57).
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Definition of “Motor Vehicle”
- Section 2(28), MVA: inclusive limb (adapted for roads) vs. exclusive limb (vehicles of special type for factory/enclosed premises).
- Off-road construction equipment (Dumpers, Loaders, Excavators, etc.) fall within the exclusion.
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Supporting Definitions & Schedules
- Rule 2(cab), CMVR 1989 defines “construction equipment vehicle” as off-highway machinery.
- First Schedule, Gujarat Tax Act prescribes no tax rate for such vehicles.
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Precedents
- Bolani Ores Ltd.: vehicles not using public roads cannot be taxed.
- Tarachand Logistics: vehicles within closed corporate premises not deriving benefit from public roads exempt.
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Rejection of Counter-Authorities
- Division-bench rulings (Natwar Parikh, Western Coalfields, etc.) ignored the exclusion in Section 2(28).
- Circulars (MoRTH) not binding if contrary to statute, though supportive of interpretation.
- Off-road construction equipment vehicles are excluded from the MVA’s “motor vehicle” definition and thus not taxable under the State Act.
Arguments by the Parties
Petitioner (Ultratech Cement Ltd.)
- Entry 57, List II limits taxation to vehicles “suitable for use on roads.”
- OEM specifications and certificates (Bharat Earth Movers, Hindustan Motors, ARAI) establish off-road design and use.
- MoRTH circular (13.07.2020) classifies such vehicles as off-road equipment requiring no registration.
- Reliance on Bolani Ores Ltd. and Tarachand Logistic Solutions Ltd.
Respondent (State of Gujarat)
- Section 3(1) Gujarat Tax Act levies tax on “all motor vehicles,” without reference to road suitability.
- MoRTH circular not issued under statutory rule-making power and applies prospectively.
- Precedents (Chief General Manager, Jagannath Area; State of Gujarat v. Akhil Gujarat Pravasi…) support taxation of these vehicles.
Factual Background
Ultratech Cement Ltd. operates two Gujarat plants using heavy earth-moving machinery (Dumpers, Loaders, Excavators, Surface Miners, Dozers, Drills, Rock Breakers) exclusively within enclosed premises. The Transport Commissioner directed registration and payment of road tax under the Gujarat Tax Act, 1958. Appellant relied on OEM and ARAI certificates confirming off-road use; nevertheless, show-cause notices demanded registration fees, arrears, interest, and penalty. Appellant paid ~₹88.45 lakhs under protest and challenged the demand in the Gujarat High Court, which dismissed the petition. Supreme Court allowed the appeal.
Statutory Analysis
- Article 265, Constitution: “No tax… except by authority of law.”
- Entry 57, List II, Seventh Schedule: “Taxes 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 in the State.”
- Section 2(10), Gujarat Tax Act: undefined terms adopt meanings in the Motor Vehicles Act, 1988.
- Section 2(28), Motor Vehicles Act, 1988:
- Inclusive: any mechanically propelled vehicle adapted for roads (including chassis/trailer).
- Exclusive: vehicles running on fixed rails; vehicles of special type adapted only for factory/enclosed premises; vehicles <4 wheels ≤25 cc.
- Rule 2(cab), CMVR 1989: defines “construction equipment vehicle” as off-highway machinery for mining/industrial/construction.
- First Schedule, Gujarat Tax Act: prescribes no rate for construction equipment vehicles.
Alert Indicators
- 🚨 Breaking Precedent – Overrules several division-bench SC rulings on State taxation of off-road equipment.
- ✔ Precedent Followed – Affirms three-Judge Bolani Ores Ltd. decision.
- 🔄 Conflicting Decisions – Resolves conflict between Bolani Ores Ltd. and Natwar Parikh/Western Coalfields rulings.