The Supreme Court recently underscored that motor vehicle tax is meant to be a charge for the use of public infrastructure, such as roads and highways. This tax is considered compensatory, meaning it is directly linked to how and where a vehicle is used. If a vehicle does not make use of public roads or is not intended for public use, the responsibility to pay this tax does not arise for the owner during that specific timeframe.
This decision came as the court reviewed a previous judgment from the Andhra Pradesh High Court. The matter revolved around Section 3 of the Andhra Pradesh Motor Vehicle Taxation Act, 1963, which clearly uses the term “public place” when defining where the tax is applicable.
The provision states that tax is to be imposed only when a vehicle is used or kept ready for use in places accessible to the public. As a result, if a vehicle is operated strictly in a private or restricted area, such as inside a factory or fenced company premises, and the public has no access, then the tax does not apply for that period.
Key Details from the Supreme Court Ruling
The case involved a logistics firm with vehicles operating inside the Visakhapatnam Steel Plant, a secured campus managed by the Rashtriya Ispat Nigam Limited (RINL). This area is enclosed, access is strictly regulated, and no member of the general public can enter freely. The vehicles in question never left the premises or moved on public roads during the period in question.
After the firm sought exemption from motor vehicle tax while its fleet was confined within the steel plant, the issue made its way to the state authority, then to the high court, and eventually to the Supreme Court. A single judge initially ruled in the company’s favor, directing the authorities to refund the collected tax. However, that order was overturned by a division bench, leading to the present appeal.
The Supreme Court ultimately restored the relief for the logistics company. The bench concluded that, since these vehicles were used exclusively inside the private compound of RINL and not in public places, they were not liable to pay the motor vehicle tax for that duration.
Implications for Vehicle Owners
This clarification sets an important precedent: if vehicles are kept exclusively off public roads and within premises that are not open to the general public, owners can challenge the imposition of motor vehicle tax for those periods.
It highlights the principle that taxes on vehicles are justified only when there is actual use, or even intent of use, on public infrastructure. This decision will help guide authorities and vehicle owners in similar situations involving private or restricted campus operations.
