Vehicles Confined to Enclosed Plant Yard Are Not Liable for State Motor Vehicle Tax

A bench of Justice Ujjal Bhuyan and Justice Manoj Misra heard an appeal against the Andhra Pradesh High Court Division Bench judgment of 19.12.2024 in Writ Appeal No. 711/2023 (arising out of SLP (C) No. 1547 of 2025) concerning whether vehicles deployed and operated exclusively within the central dispatch yard of Visakhapatnam Steel Plant (RINL) were liable to motor vehicle tax under Section 3 of the Andhra Pradesh Motor Vehicles Taxation Act, 1963.

The Supreme Court allowed the civil appeal, set aside the Division Bench’s order and restored the Single Judge’s judgment of 13.06.2023. The Court held that Section 3 was the charging provision and that the tax attached only where a motor vehicle was “used or kept for use in a public place in the State.” The Court read Rule 12A of the A.P. Rules so as to remain within the scope of the parent statute and stated that Rule 12A must be interpreted to mean that a vehicle is deemed kept for use only “in a public place.” The Court, in its reasoning, observed: The Court noted that Bolani Ores Limited supported the approach that enclosed premises to which the public had no right of access did not constitute a “public place.” The Court observed that “taxation statute has to be interpreted strictly” and that the levy must be authorised by clear legislative words.

Background The appellant, M/s Tarachand Logistic Solutions Limited, was awarded a contract in November 2020 for handling and storage of iron and steel at RINL’s central dispatch yard and, pursuant to a work order, deployed 36 motor vehicles inside the enclosed yard. From 01.04.2021 the vehicles did not ply on public roads and remained within the yard, access to which was regulated by CISF and gate passes. The appellant sought exemption from motor vehicle tax for the period the vehicles remained confined to the yard under Section 3 of the A.P. Act, 1963. The Regional Transport Officer inspected the vehicles, raised demands totalling Rs. 22,71,700, and the appellant paid under protest while reserving its right to seek refund. The appellant invoked Rule 12A and Section 4(1)(b) provisions and filed writ proceedings. A Single Judge allowed the writ, held the central dispatch yard was not a ‘public place’ and directed refund. The Division Bench reversed, relying on Rule 12A and the principle that a vehicle was presumptively “kept for use” unless non-use was intimated, and treated RINL premises as a public place; it also relied on precedents such as Akhil Gujarat Pravasi V.S. Mahamandal to support a broader tax incidence. The State contended that actual use of public roads was not necessary and that the appellant had not filed the stoppage intimation under Rule 12A. The Supreme Court distinguished Akhil Gujarat, followed Bolani Ores Limited, held that Rule 12A could not be read to widen Section 3, and concluded that vehicles used exclusively within a restricted RINL yard were not used or kept for use in a “public place.” The Court allowed the appeal, set aside the Division Bench judgment dated 19.12.2024 and restored the Single Judge’s order dated 13.06.2023. Earlier, upon grant of notice, the Supreme Court had stayed the operation of the Division Bench order but restrained enforcement of the Single Judge’s directions pending final adjudication.

Case Details: Case No.: 2025 INSC 1052 Case Title: M/s. Tarachand Logistic Solutions Limited v. State of Andhra Pradesh & Ors. Appearances: For the Petitioner(s): Mr. Vijay Hansaria, Senior Counsel For the Respondent(s): Ms. Prerna Singh, Learned State Counsel