No Motor Vehicle Tax on Vehicles Used Exclusively Within Factory Premises: Supreme Court

No Motor Vehicle Tax on Vehicles Used Exclusively Within Factory Premises: Supreme Court

Introduction

The Supreme Court has ruled that vehicles operating exclusively within the enclosed premises of a factory or plant are not liable to pay motor vehicle tax, as such areas do not constitute a "public place."

Factual Background

The dispute arose from a contract between Tarachand Logistic Solutions Limited and Visakhapatnam Steel Plant (RINL) for logistical work within the plant's central dispatch yard. The company deployed 36 vehicles which operated solely inside the steel plant's premises, an area surrounded by compound walls with access controlled by CISF personnel.

Procedural Background

The company sought relief from paying motor vehicle tax, believing that exclusive internal use made them exempt. However, the State Transport Department rejected the request and demanded over ₹22 lakh, which the company paid under protest. The Andhra Pradesh High Court's Division Bench later upheld this demand, leading to the appeal in the Supreme Court.

Contentions of Parties

Appellant (Tarachand Logistic Solutions Limited): The company argued that the vehicles were not used in a public place and therefore, were not liable to pay motor vehicle tax.

Respondent (State of Andhra Pradesh): The respondent argued that the appellant had not intimated non-use of the motor vehicles in terms of Rule 12A and therefore, the vehicles were liable to pay motor vehicle tax.

Reasoning and Analysis

The court strictly interpreted the charging Section of the Andhra Pradesh Motor Vehicle Taxation Act, 1963, which states that tax would be levied on vehicles "used or kept for use in a public place." The court defined "public place" as a space "to which the public have a right of access" and held that the steel plant premises, being a closed area with access controlled by CISF personnel, was not a public place.

Decision

The bench comprising Justices Manoj Misra and Ujjal Bhuyan allowed the appeal and held that the vehicles operating within the factory premises were not liable to pay motor vehicle tax. The court directed that the motor vehicle tax paid by the appellant be refunded.

In this case the appellant was represented by Mr. Vijay Hansaria, Sr. Adv. with Mr. Sanjay Sarin, Ms. Gagan Deep Kaur, Ms. Kavya Jhawar, Mr. Preshit D. Bagul, Advocates and Mr. Dinkar Kalra, AOR.

Meanwhile the respondent was represented by Ms. Prerna Singh, Advocate with Mr. Guntur Pramod Kumar, AOR and Mr. Dhruv Yadav, Advocate.