Ruling on Ultratech Cement’s appeals, the Supreme Court held that construction equipment vehicles used solely within factory or enclosed premises are special off-road vehicles, not motor vehicles, exempt from registration and tax under the Gujarat Motor Vehicles Tax Act.
NEW DELHI: The Supreme Court ruled that “construction equipment vehicles” such as dumpers, loaders, excavators, surface miners, dozers, drills, and rock breakers, when used exclusively within factory premises or designated enclosed areas, are classified as special vehicles not intended for public road use and, therefore, are exempt from road tax.
This decision came during a hearing of civil appeals filed by Ultratech Cement Limited, which challenged judgments from the Gujarat High Court that supported the State authorities’ demands for registering these vehicles as “motor vehicles” and imposing road tax under the Gujarat Motor Vehicles Tax Act, 1958.
A Bench comprising Justices Pankaj Mithal and Prasanna B. Varale noted,
“Vehicles of the kind used by the appellants are construction equipment vehicles meant for off-road use within industrial or enclosed premises and stand excluded from the definition of ‘motor vehicle’ under Section 2(28) of the Motor Vehicles Act, 1988, as well as from taxation under Entry 57 of List II of the Seventh Schedule to the Constitution.”
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Factual Background of the Case
Ultratech Cement Limited operates cement manufacturing plants in Gujarat, using various heavy earth-moving and construction vehicles for its mining and industrial operations. These vehicles were transported to the factory premises in disassembled form on trailers, remaining confined within enclosed industrial areas and not being used on public roads.
Initially, the Regional Transport Officer acknowledged that these vehicles were not required to be registered under the Motor Vehicles Act, 1988. However, the Transport Commissioner later issued directives mandating registration of special service vehicles and payment of road tax under the Gujarat Motor Vehicles Tax Act, 1958. This led to show cause notices demanding registration fees, tax, interest, and penalties, forcing the appellants to pay significant amounts under protest.
The appellants subsequently approached the Gujarat High Court to quash the demands and seek a refund of the amounts paid. However, the High Court dismissed their petitions, ruling that the vehicles fell within the definition of “motor vehicle” and were subject to taxation. Unhappy with this outcome, the appellants escalated the matter to the Supreme Court.
Observations of the Court
The Supreme Court examined Entry 57 of List II of the Seventh Schedule to the Constitution, which allows taxation only for vehicles suited for road use, alongside Article 265, which states that no tax can be levied or collected without legal authority.
The Court observed that while Section 3 of the Gujarat Motor Vehicles Tax Act, 1958 allows tax on all motor vehicles used or kept for use in the State, this provision cannot extend beyond the constitutional boundaries established under Entry 57. Thus, vehicles not meant for road use cannot be taxed.
Referring to the definition of “motor vehicle” in Section 2(28) of the Motor Vehicles Act, 1988, the Court noted that while the definition is broad at first, it specifically excludes vehicles adapted exclusively for use within factory or other enclosed areas. The vehicles used by the appellants clearly fell into this exclusion category.
The Bench relied on unchallenged certificates from manufacturers and expert organizations, including the Automotive Research Association of India, confirming that the vehicles were designed solely for off-road industrial use and had not received road worthiness certificates. It was further noted that the vehicles were not driven on roads, as they were transported on trailers.
Additionally, the Court reviewed Schedule I of the Gujarat Motor Vehicles Tax Act, 1958, noting that construction equipment vehicles were mentioned but no tax rate was assigned to them. This reinforced the Court’s conclusion that the statute did not envisage a road tax on such equipment.
Citing prior decisions, including Bolani Ores Ltd. v. State of Orissa, the Court affirmed that the term “adapted for use upon roads” should be interpreted as “suitable for use on roads,” meaning that vehicles that are not actually used on public roads cannot be taxed.
The Court distinguished earlier decisions cited by the State, asserting that those did not account for the specific exclusion in Section 2(28) of the Motor Vehicles Act, 1988. However, the Bench clarified that if any construction equipment vehicles are discovered to be utilized on public roads, they would be subject to the provisions of Section 2(28) of the Motor Vehicles Act, 1988 and Section 3 of the Gujarat Motor Vehicles Tax Act, 1958, which could lead to their seizure and penalties according to the law.
Conclusion
The Supreme Court concluded that the construction equipment vehicles used by Ultratech Cement Limited within factory premises or enclosed industrial areas are classified as off-road vehicles that are excluded from the “motor vehicle” definition and thus are not liable for road tax.
The Court accordingly set aside the judgments of the Gujarat High Court and allowed the appeals.
Appearances Appellant: Senior Advocates P. Chidambaram and Nakul Dewan with Advocates Mahesh Agarwal, Ankur Saigal, Rohan Talwar, Himanshu Saraswat, Uday Aditya Jetley Pocha, Naman Agarwal, Adya Joshi, Satyender Saharan, Rohan Andrew Naik, Ishika Garg, Sathvik Chandrashekar and E. C. Agrawala AOR
Respondents: Senior Advocate K. Parameshwar with Advocates Prasad Hegde, Veda Singh, Priyal Sheth and Deepanwita Priyanka AOR
Case Title: Ultratech Cement Limited v. The State of Gujarat And Others
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