The Kerala High Court ruled that Bharat (BH) registration vehicles must pay motor vehicle tax according to state rates, not those set by the Central Government. The decision arose from vehicle owners challenging registration refusals due to tax issues. The Court affirmed that motor vehicle taxation is exclusively a state matter under the Constitution.
Kerala: The Kerala High Court has clarified that vehicles with Bharat (BH) registration must pay motor vehicle tax according to the rates specified by the State where registration is sought. The Court ruled that the Central Government does not have the authority to prescribe tax rates for BH series vehicles, as motor vehicle taxation falls exclusively within the jurisdiction of the States.
The ruling was delivered by Justice Dinesh Kumar Singh in response to petitions filed by vehicle owners. They challenged the refusal of the Kerala Motor Vehicle Department to register their BH-series vehicles without paying the State’s motor vehicle tax.
Introduced in 2021, the Bharat Series (BH series) allows seamless transfer of vehicles across States, benefiting individuals who frequently relocate due to work. Eligible for BH registration are defense personnel, employees of Central/State Governments, public sector undertakings, and private companies with offices in four or more States/Union Territories. Unlike other registrations, BH registration eliminates the need for re-registration when moving between States.
The Central Motor Vehicles (Twentieth Amendment) Rules, 2021, introduced Rule 51B, prescribing tax rates for BH-series vehicles:
- Below Rs 10 lakh: 8% of the invoice price
- Rs 10-20 lakh: 10%
- Above Rs 20 lakh: 12%
Diesel vehicles incur an additional 2%, while electric vehicles enjoy a 2% reduction.
The High Court examined whether the Central Government could prescribe tax rates for BH-series vehicles. Citing Article 246 and Entry 57 of List II in the Seventh Schedule of the Constitution, the Court held that motor vehicle taxation is the States’ exclusive domain. The Centre can only lay down principles for taxation under Entry 35 of List III, but this does not extend to determining tax rates.
“The Central Government may lay down principles… but the tax rates fall under the States’ exclusive domain,”
the Court stated. Consequently, the tax rates specified by the Centre for BH-series vehicles were deemed unenforceable.
The Court directed the petitioners’ vehicles to be registered under the BH series, subject to paying taxes as per the Kerala Motor Vehicle Taxation Act, 1976, while adhering to the principles outlined in Rule 51B(1) and Rule 51B(3) of the Central rules.
Case : Harish Kumar KP v Union of India
Read the judgement here:
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