Kerala HC: Vehicles Registered As Goods Carriage Vehicles Can't Be Classified Under Different Head For Demanding One-Time Tax
Pranav B Prem
The Kerala High Court has ruled that vehicles registered as goods carriage vehicles cannot be reclassified under a different category for the purpose of imposing one-time tax under the second proviso to Section 3(1) of the Kerala Motor Vehicles Taxation Act. The Division Bench, comprising Justices Dr. A.K. Jayasankaran Nambiar and Easwaran S., observed that the transport authorities must maintain consistency in taxation and cannot alter their classification for levying one-time tax.
Background of the Case
The appellant, Managing Partner of Vee Tee Logistics, is the registered owner of four goods carriage vehicles. These vehicles were initially registered as goods carriage vehicles, and the tax was collected accordingly under the Kerala Motor Vehicles Taxation Act, 1976. However, the taxing authorities later demanded a one-time tax from the appellant by reclassifying the vehicles as 'construction equipment vehicles' under Annexure 1 of the Kerala Motor Vehicles Taxation Act, 1976. Aggrieved by this decision, the appellant challenged the demand before a Single Judge of the Kerala High Court. The Single Judge, relying on a previous decision in WP(C) No. 3697 of 2022, upheld the reclassification and ruled against the appellant. Subsequently, the appellant preferred a writ appeal before the Division Bench.
Contentions of the Parties
The appellant, represented by Advocate K.V. Gopinathan Nair, argued that the requirement of consistency in taxation obligates the authorities to adopt a uniform approach. It was contended that since the department had accepted the classification of the vehicles as goods carriage vehicles for the purpose of motor vehicle tax, they could not change their classification for the levy of one-time tax.
On the other hand, the respondent authorities, represented by Government Pleader V.K. Shamsudheen, justified the levy of one-time tax based on a circular issued by the Transport Commissioner. The circular clarified that goods carriage vehicles used as construction vehicles must pay one-time tax under Annexure 1 of the Kerala Motor Vehicles Taxation Act.
Court's Findings
After considering the submissions, the Division Bench found merit in the appellant’s arguments and held that the revenue authorities cannot take an inconsistent approach in taxation matters. The Court noted: "It is significant that even in the Schedule to the Kerala Motor Vehicles Taxation Act, there is a separate entry that deals with construction equipment vehicles. If it had been the case of the department that the vehicles merited classification as construction equipment vehicles, then they should have demanded tax under the Schedule to the Motor Vehicles Taxation Act only as applicable to Construction Equipment Vehicles."
The Bench further stated: "That not having been done by the respondent, we are of the view that they cannot alter their stand and classify the vehicles separately for the purposes of levy of one-time tax as per Annexure 1 to the Kerala Motor Vehicles Taxation Act." The Court distinguished the case law relied upon by the Single Judge, stating that the facts of the instant case were different. It emphasized that taxation authorities should maintain uniformity and fairness in tax imposition and should not resort to arbitrary reclassification.
Verdict
In light of the above findings, the Division Bench set aside the judgment of the Single Judge and allowed the writ appeal. The Court also quashed the demand for one-time tax and the blocking of the vehicles on the Parivahan Site. The Court clarified that the appellant shall continue paying motor vehicle tax under the Schedule applicable to goods carriage vehicles for as long as the vehicles remain unaltered.
Advocates Representing Parties
For Appellant/Assessee: K.V. Gopinathan Nair
For Respondent/Department: V.K. Shamsudheen
Cause Title: Managing Partner, Vee Tee Logistics v. Joint Regional Transport Officer
Case Number: WA NO. 2129 OF 2024
Citatiton: 2025:KER:20470
Coram: Justice Dr. A.K. Jayasankaran Nambiar, Justice Easwaran S
[Read/Download order]
