The Kerala High Court recently granted relief to Petitioners owning the relatively new ‘BH series’ registered vehicles, holding that they are liable to be taxed as per the provisions of the Kerala Motor Vehicle Taxation Act, 1976 as per the principles of the Central Motor Vehicle (Twentieth Amendment) Rules, 2021.
The Decision was rendered by the Kerala High Court while jointly adjudicating multiple civil writ petitions founded on similar grounds, all of which were filed by employees of the Central Government and Central Government Undertakings, including Banks. All of the Petitioners were left aggrieved by the non-registration of their newly purchased vehicles under the ‘Bharat Series’ (BH Series) by the Kerala Transport Authorities.
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In order to overcome the immense difficulties and convoluted steps involved in the interstate registration of vehicles, the Central Government had introduced a new registration mark viz the BH Series which is available to Defense personnel, employees of the Central Government/ State Government/ Central or State Public Sector Undertakings and private sector companies/ organizations that have their offices in four or more State/Union territories.
The Central Motor Vehicles ( Twentieth Amendment ) Rules, 2021, established Rule 51B to define the taxation framework for BH series vehicles. Under Rule 51B(2), vehicles with an invoice price under ₹10 lakhs are taxed at 8%, while those between ₹10-20 lakhs at 10%, and those above ₹20 lakhs at 12%. An extra 2% tax applies to diesel vehicles, while electric vehicles receive a 2% tax discount.
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Advocates George Varghese, Jaykar K S, Satyendra Kumar Jha (party-in-person), S Muhammed Haneeff, K Shaj, Peeyus A Kottam, K J Manu Raj, Thomas T Varghese, Ambily Premkumar, and T R Vishnu appearing for the petitioners submitted before the High Court that the Kerala State Transport Authorities have refused to grant BH Series registration to the Petitioners on the ground that motor vehicle tax is a state subject as per Entry 57 of List II of the Seventh Schedule to the Constitution and effectuated by the Kerala Motor Vehicle Taxation Act, 1976.
Conversely, Deputy Solicitor General (DSG) T S Krishna appearing for the Central Government addressed the responsibility of the State Government to implement the Central Motor Vehicle (Twentieth Amendment) Rules 2021 and 2022. Furthermore, the DSG contended that the Central Government has in no way entrenched upon the powers of the State on the collection and levy of tax.
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Special Government Pleader (Taxes) Muhammed Rafiq, appearing for the State of Kerala averred that any law made by the Parliament supercede any law by the State Legislature, but maintained that any subordinate legislation by the Central Government such as Central Motor Vehicle (Twentieth Amendment) Rules 2021 and 2022 would not be operative so far as the registration of the motor vehicle under the BH series and taxes are concerned.
A Single-Judge Bench of Justice D.K. Singh observed that the primary issue for consideration is whether the Central Government, exercising powers under Section 64 of The Motor Vehicles Act, 1988 can frame allied Rules to prescribe the rate of tax to be charged by the State on motor vehicles.
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The High Court noted that a reading of Article 246 along with Entry 57 of the List II of the Seventh Schedule of the Constitution of India, categorises the rate of tax on motor vehicles within the domain of the States. Consequently, the Court observed that Rule 51B(2) of the Central Motor Vehicle Rules would be constitutionally unenforceable with the same being beyond the legislative competence of the Central Government.
However, Justice D.K. Singh clarified that while the states are not obliged to implement the rate of tax as per the Central Rules, the State Governments may only levy taxes as per the principles prescribed under sub-rules (1) and (3) of Rule 51B of the Central Motor Vehicle (Twentieth Amendment) Rules 2021.
Concludingly, the Bench directed the transport authorities to duly register the petitioners’ vehicles under the BH Series while charging taxes as per the Kerala Motor Vehicle Taxation Act 1976.
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