Rajasthan HC Upholds Insertion of New ‘Sleeper Bus’ Tax Category in State Motor Vehicle Tax Rules [Read Order]

Khuman Singh, the petitioner, filed a writ petition challenging the amendment made by the Transport Department of Rajasthan through a notification dated 24 February 2021. By this amendment, a new category at Serial No. 7(a)(iii) “Sleeper Bus” was inserted in the earlier notification dated 10 July 2019.

The petitioner also challenged the subsequent notices in Form MTR dated 24 March 2023 and in Form MTQ dated 21 June 2023 demanding tax for the period between April 2022 and June 2023.

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The petitioner’s counsel argued that the State Government had no authority to create a new class of vehicles on the basis of body type, since classification of motor vehicles is the exclusive domain of the Central Government under the Motor Vehicles Act, 1988.

The counsel further argued that the amendment was arbitrary, discriminatory, and in violation of Articles 14 and 265 of the Constitution of India. The petitioner also submitted that the demand notices were issued in breach of Rule 8 of the Rajasthan Motor Vehicles Taxation Rules, 1951, without giving a proper hearing or providing a certified computation order.

The State’s counsel argued that the insertion of the “Sleeper Bus” category was justified and in public interest. They explained that sleeper buses are primarily meant for long-distance night travel, and granting them exemption would have led to a shift of such buses to regional routes, reducing availability for long journeys.

The respondents further argued that the State was well within its powers under Section 4 of the Rajasthan Motor Vehicles Taxation Act, 1951 to categorize vehicles for taxation, and that the validity of “Sleeper Coach” under the Rajasthan Motor Vehicles Rules, 1990 had already been upheld earlier by the High Court. The Union of India supported the stand of the State Government.

The Division Bench comprising Justice Vinit Kumar Mathur and Justice Anuroop Singhi observed that the vehicle in question was registered as a “Bus,” and that the State had the competence to further categorize buses based on body type for taxation purposes.

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The court pointed out that “Sleeper Bus” and “Sleeper Coach” are the same, and since the latter is already defined under the Rajasthan Motor Vehicles Rules, 1990, there was no illegality in creating the category for taxation.

The court explained that exemptions may be granted or denied by the State depending on public interest, and in this case, the decision not to extend exemption to sleeper buses was justified.

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At the same time, the court found that the demand notices issued in March and June 2023 did not comply with Rule 8 of the Rajasthan Motor Vehicles Taxation Rules, 1951, as they failed to provide proper reasoning or attach a certified computation order. The court quashed both notices but upheld the validity of the amendment inserting the new category.

The court partly allowed the writ petitions, holding that the State Government’s insertion of the new “Sleeper Bus” tax category was lawful, but the impugned demand notices were invalid. The respondents were given liberty to initiate fresh proceedings strictly in accordance with law.

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