Registered Goods Carriage Vehicles cannot be Reclassified for One-Time Tax on Construction Use: Kerala HC [Read Order]

In a recent ruling, the Kerala High Court held that vehicles registered as Goods Carriage Vehicles cannot be reclassified as Construction Equipment Vehicles solely for the purpose of levying a one-time tax.

Vee Tee Logistics, a transport company, had initially registered four vehicles as Goods Carriage Vehicles and paid taxes under the Kerala Motor Vehicles Taxation Act, 1976. The Transport Department later attempted to reclassify these vehicles as Construction Equipment Vehicles and demanded a one-time tax, arguing that they were being used for construction purposes.

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Challenging this demand, the petitioner’s counsel argued that the tax authorities must maintain consistency in classification and taxation. The petitioner’s counsel argued that since the vehicles were already taxed under the Goods Carriage Vehicles category, the authorities could not arbitrarily change their classification to impose additional tax.

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The Transport Department relied on a circular issued by the Transport Commissioner, which directed that vehicles used in construction work should be subject to one-time tax under Annexure 1 of the Kerala Motor Vehicles Taxation Act.

The department’s counsel argued that the vehicles though registered as Goods Carriage Vehicles, were functionally being used as Construction Equipment Vehicles and must be taxed accordingly.

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The bench comprising Justice A. K. Jayasankaran Nambiar & Justice Easwaran S. observed that if the Transport Department intended to classify the vehicles as Construction Equipment Vehicles, they should have done so at the time of initial registration and tax assessment.

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The vehicles had already been classified and taxed under one category, the authorities could not alter their classification to levy an additional tax. The court also distinguished this case from earlier judgments cited by the government, ruling that those cases involved different factual circumstances.

The court rejected the reclassification and ruled that the government cannot change a vehicle’s classification after already taxing it under a different category. The court allowed the writ appeal.

To Read the full text of the Order CLICK HERE

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