MV tax only for use in public area: SC

NEW DELHI: Supreme Court has held that the motor vehicles tax, which is imposed for use of public places and infrastructure, cannot be levied if a vehicle does not use the same.

" 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. Legislature has consciously used the expression ' public place ' in Section 3. If a motor vehicle is not used in a 'public place' or not 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," a bench of Justices Manoj Misra and Ujjal Bhuyan said. The bench passed the order while interpreting the Andhra Pradesh Motor Vehicle Taxation Act , whose section 3 says govt may from time to time direct that a tax shall be levied on every motor vehicle used or kept for use in a public place in the State.

It thereby allowed the plea of a company which had pleaded that it was not liable to pay tax as its vehicles were used in the central dispatch yard premises belonging to Visakhapatnam Steel Plant of Rashtriya Ispat Nigam Limited (RINL) and were not plying on public roads. The state had taken the stand that actual use or non-use of public roads cannot be a ground for escaping tax liability. The bench said the taxable event under Section 3 arises when a vehicle is used or kept for use in a public place in the State.

"Therefore, the tax is on the user 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.... Requirement of law is that the motor vehicle should be used or kept for use in a 'public place'. When admittedly the motor vehicles of the appellant were confined for use within the RINL premises which is a closed area then the question of vehicles being used or kept for being used in a 'public place' does not arise," it said.

The court said the motor 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. Argument of the respondent that appellant had not intimated non-use of the motor vehicles in terms of Rule 12A does not carry much persuasion in view of what we have discussed supra. Thus, even in the absence of any intimation in terms of Rule 12A, motor vehicles of the appellant cannot be subjected to motor vehicle tax for the period those were used or kept confined within restricted premises of RINL".