In a recent decision, the Andhra Pradesh High Court ruled that the Motor Vehicle Tax is not leviable on Motor Vehicles exclusively used for contracts inside the Central Deposit Yard.
The petitioner, Tarachand Logistics Solutions Limited is a company registered under the Companies Act 1956, engaged in the business of providing logistics support. The petitioner company was awarded the Contract dated 17.11.2020 for a period of 4.5 years for the Handling and storage of Iron and Steel Material at the Central Dispatch Yard situated inside of Visakhapatnam Steel Plant, Andhra Pradesh, a corporate entity of Rashtriya Ispat Nigam Limited (RINL).
Prior to the aforesaid contract, the petitioner has paid the Motor Vehicle Tax in respect of the above-referred vehicles to the concerned authorities and attained Fitness Certificate, Insurance Certificate and Pollution Under Control Certificate in accordance with the statutory provisions.
Upon allotment of the contract, the motor vehicles in batches were deployed to Central Deposit Yard premises and with effect from 01-04-2021 all the motor vehicles stopped plying upon the public roads and were thereafter used exclusively for the purpose of the contract and were to only ply inside the Central Deposit Yard premises and not leave the compound at any period of time till the end of the contract for any other use. Therefore, these vehicles were not used or kept for use on any of the roads maintained by the State of Andhra Pradesh.
The respondents without conducting a proper assessment as per Andhra Pradesh Motor Vehicle Act, inspected the motor vehicles and raised a demand of Rs.7,37,960/- without disclosing the calculation how the tax arrears, penalty arrears etc. were raised in the demand notice.
A Single Bench of Justice V Sujatha noted that “The subject motor vehicles were deployed to Central Deposit Yard Premises and with effect from 01.04.2021, all the motor vehicles have stopped plying upon the public roads and were being used exclusively for the purpose of contract of the petitioner and were only plying inside the Central Deposit Yard but did not leave the compound of the Yard at any period of time.”
The Bench concluded by observing that the subject vehicles are not liable to be taxed and such vehicles are entitled to get exemption as contemplated in the Act. As the Central Deposit Yard is a highly restricted area with no ordinary member of the public having any access to enter the premises, the definition of public place under Section 2 (34) of the Andhra Pradesh Motor Vehicle Act would not apply to the above said Yard.
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