In a recent ruling, the Madras High Court ordered the Tamil Nadu Government to refrain from collecting road taxes from omni buses for the period affected by the COVID-19 lockdown. The court stated that the operators cannot be taxed for vehicles that were not in operation due to pandemic-related restrictions.
During the COVID pandemic, the Government imposed strict lockdown measures which led to a complete cease of operation in the transport sector including private omni buses. Despite this, the Tamil Nadu State Transport Authority demanded tax payments for this period. The bus operators submitted stoppage reports to prove the non-operation of their vehicles. Unfortunately, these stoppage reports were rejected by the authorities.
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Aggrieved by the rejection, the Omni bus operators challenged the order before the Madras High Court arguing that it was unjust to impose taxes when their vehicles had not been in use. In their view, the government’s tax demand violated the principle of fairness, as the operators were not earning revenue during the lockdown.
The state argued that under Rule 172(6) of the Tamil Nadu Motor Vehicles Rules, the tax fee should be paid every 20 days stoppage and it would be a great loss to the exchequer and public if it were to accept the report.
After reviewing the case, the Madras High Court agreed with the bus operators. The court ruled that the government cannot demand taxes for the period when omni buses were not operating due to COVID-19 restrictions. The court pointed out that taxes are based on the use of public infrastructure, and if buses were not on the roads, no tax could be justified.
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The court nullified the government’s rejection of the stoppage reports submitted by the bus operators. The court also directed the Tamil Nadu government to reconsider its position on these stoppage reports and issue new guidelines for handling similar situations in the future.
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