Vehicles Used Only Inside Enclosed Industrial Premises Not Liable to Motor Vehicle Tax: Supreme Court [Read Order]

In a recent ruling, the Supreme Court held that vehicles which are used only inside enclosed industrial premises not accessible to the general public are not liable to motor vehicle tax under Section 3 of the Andhra Pradesh Motor Vehicles Taxation Act, 1963.

Tarachand Logistic Solutions Limited, a logistics company, was awarded a contract by Rashtriya Ispat Nigam Limited (RINL) in November 2020 for handling and storage of iron and steel materials inside the central dispatch yard at Visakhapatnam Steel Plant.

Pursuant to the work order of January 2021, the company deployed thirty-six heavy vehicles inside the central dispatch yard. From April 2021 onwards, these vehicles stopped using public roads and were confined exclusively within the yard, which is enclosed by compound walls and guarded by CISF personnel, with no public access.

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The company wrote to the state authorities in December 2020 and October 2021, requesting exemption from payment of motor vehicle tax on the ground that the vehicles were not being used on public roads. The Regional Transport Officer rejected the claim in June 2022, observing that RINL is a government company, so its premises amounted to a public place. The officer also raised tax demands which the company paid under protest.

The Single Judge of the High Court of AndhraPradesh allowed the company’s writ petition in June 2023, observing that the vehicles were deployed only within the restricted premises of the central dispatch yard, which does not fall within the definition of a public place under Section 2(34) of the Motor Vehicles Act, 1988. The Single Judge directed refund of ₹22,71,700 to the company.

The Division Bench reversed this decision in December 2024. It pointed out that Rule 12A of the Andhra Pradesh Motor Vehicles Taxation Rules, 1963 deems a vehicle to be kept for use and liable for tax unless a stoppage report of non-use is filed. Since the company had not submitted such an intimation, the Division Bench upheld the levy of tax and dismissed the company’s claim.

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The company then appealed to the Supreme Court. The appellant's counsel argued that liability under Section 3 arises only when a motor vehicle is used or kept for use in a public place. The counsel explained that the central dispatch yard is a closed, guarded area without public access, and thus cannot be treated as a public place.

The State’s counsel argued that RINL is a government-funded company and its premises must be treated as a public place. The counsel further argued that under Rule 12A, a presumption of use arises unless a written non-use intimation is given, which the company had failed to do.

The bench comprising Justice Manoj Misra and Justice Ujjal Bhuyan observed that Section 3 clearly provides for levy of tax only when a motor vehicle is used or kept for use in a public place. The court explained that a public place means a road, street, or area where the public has a right of access. The Company yard was a restricted area with entry controlled by CISF, so it could not be treated as a public place.

The court further pointed out that Rule 12A is subordinate legislation and must be read in harmony with Section 3, not in isolation. The absence of a stoppage report could not extend the scope of taxation beyond what the parent Act allows.

Considering that the vehicles were confined within RINL’s restricted premises and did not use public infrastructure, the Court held that they were not liable to motor vehicle tax for the relevant period.

The judgment of the Division Bench dated 19 December 2024 was set aside, and the order of the Single Judge dated 13 June 2023 was restored. The appeal was allowed, with no order as to costs.

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