Off-Road Construction Vehicles Not ‘Motor Vehicles’ Under Law: Supreme Court Quashes Road Tax on Dumpers, Excavators, and Dozers

“A Vehicle Meant Only for Use in a Factory or Enclosed Premises Stands Excluded from the Definition of Motor Vehicle” –  In a major victory for industrial and mining enterprises, the Supreme Court of India holding that heavy earth moving machinery such as dumpers, dozers, excavators, and surface miners, used exclusively within factory or enclosed premises, are not ‘motor vehicles’ under the Motor Vehicles Act, 1988, and cannot be subjected to motor vehicle tax under the Gujarat Motor Vehicles Tax Act, 1958.

Delivering the judgment, the bench comprising Justice Pankaj Mithal and Justice Prasanna B. Varale allowed four connected appeals filed by Ultratech Cement Ltd. and other industrial entities, setting aside the Gujarat High Court’s decision dated 15.07.2011, which had upheld the State’s levy of road tax on such construction equipment vehicles.

“Though the vehicles used by the appellant are ‘motor vehicles’ within the first part of the definition under Section 2(28) of the Act, they stand excluded by virtue of the second part of the said definition,” the Court emphatically held.

The decision has far-reaching implications for industrial users of off-road machinery, reinforcing the constitutional limit under Entry 57, List II of the Seventh Schedule which empowers the State to tax only those vehicles that are “suitable for use on roads.”

“Taxing Power Under Entry 57 Is Confined to Vehicles Suitable for Use on Roads” – Court Declares Gujarat’s Levy on Off-Road Machinery Unconstitutional

The core issue before the Court was whether various types of Heavy Earth Moving Machinery (HEMM)—including dumpers, loaders, dozers, rock breakers, and excavators—used solely within the factory premises of Ultratech Cement's manufacturing units in Gujarat, could be taxed as motor vehicles under the Gujarat Motor Vehicles Tax Act, 1958, relying on Section 2(28) of the Motor Vehicles Act, 1988.

Rejecting the State’s argument that registration or mechanical propulsion alone makes a vehicle taxable, the Supreme Court clarified the constitutional threshold:

“Entry 57 of List II authorizes taxation of vehicles ‘suitable for use on roads’. The Gujarat Tax Act cannot travel beyond this constitutional limitation.”

The Court highlighted that the vehicles in question do not ply on public roads, are transported in dismantled condition, and have no road-worthiness certificates. Their use is confined to enclosed premises, and they are designed specifically for off-road industrial operations.

“Registration Under Motor Vehicles Act Does Not Create Tax Liability If Vehicle Is Excluded by Law” – Supreme Court Clarifies There Is No Estoppel Against Statute

A key argument advanced by the State was that since the vehicles had been registered under the Motor Vehicles Act, the appellants could not now resist tax liability. The Court strongly rejected this position, observing:

“Mere registration of vehicles under the Motor Vehicles Act does not create liability to pay road tax. If vehicles are otherwise excluded under the statute and Constitution, registration cannot validate an illegal levy.”

Referring to the 2025 ruling in Tarachand Logistic Solutions Ltd. v. State of Andhra Pradesh, the Court reiterated:

“Vehicles operating within closed premises and not deriving benefit from public road infrastructure are not taxable.”

The Court noted that the manufacturers—Bharat Earth Movers Ltd., Hindustan Motors Ltd., and Automotive Research Association of India (ARAI)—had all issued unrefuted certificates confirming that these vehicles are designed exclusively for off-road industrial use and not suitable for use on roads.

“Definition of Motor Vehicle Has an Express Exclusion for Vehicles Adapted Only for Use in Factories or Enclosed Premises” – Court Decodes Section 2(28) of Motor Vehicles Act

Referring to the definition of “motor vehicle” under Section 2(28) of the Motor Vehicles Act, the Court made a crucial distinction:

“The definition is in two parts—while the first part includes all mechanically propelled vehicles adapted for use upon roads, the second part excludes vehicles of a special type adapted for use only in a factory or enclosed premises.”

The Court applied this exclusion directly to the construction vehicles in question, noting: “The vehicles used by the appellant are of a special type, essentially meant to be used as construction equipment within enclosed premises and as such, ex-facie stand excluded from the definition of motor vehicle.”

Further support was drawn from Rule 2(cab) of the Central Motor Vehicles Rules, 1989, which defines “construction equipment vehicles” as vehicles designed for off-highway operations in mining, industrial undertakings, and construction activity.

Absence of Tax Rate for Construction Equipment Vehicles in Gujarat Tax Act Reveals Legislative Intent to Exclude

The Court also took note of the absence of any tax rate for construction equipment vehicles under the First Schedule to Section 3(1) of the Gujarat Motor Vehicles Tax Act, observing:

“The Schedule prescribes no rate of tax on construction equipment vehicles. Therefore, it can be concluded that the Gujarat Tax Act itself does not contemplate taxing such vehicles.”

In a significant clarification, the Court ruled that vehicles excluded from the definition of motor vehicles under Section 2(28) cannot be taxed, regardless of how they are treated for other regulatory purposes.

Earlier Contradictory Judgments Distinguished: Bolani Ores Reaffirmed as Governing Law

The Supreme Court reaffirmed the celebrated ruling in Bolani Ores Ltd. v. State of Orissa (1974) 2 SCC 777, where it had been held that:

“Vehicles used exclusively within industrial premises and not using public roads cannot be taxed.”

The Court distinguished contrary decisions such as Natwar Parikh, Western Coalfields, and Jagannath Area, holding that those cases did not consider the exclusionary clause in Section 2(28) and hence were not binding precedents for the present factual context.

Importantly, the Court warned that adopting a blanket view would lead to absurd results:

“If such an interpretation is accepted, even aircrafts or army tanks, capable of moving on roads, would fall within the tax net—which cannot be the legislative intent.”

Construction Equipment Used Within Factory Premises Excluded from Tax Regime, But Warning Against Road Use Remains

In conclusion, the Court declared: “We are of the conclusive opinion that the vehicles used by the appellants are special types—precisely construction equipment vehicles—which are suitable and meant for use within industrial or factory premises and are not meant for use on public roads.”

The appeals were allowed, and the High Court's judgments were set aside. However, the Court issued a caveat:

“If such vehicles are found using roads, they would not be free from the rigors of Section 2(28) of the Act and Section 3 of the Gujarat Tax Act, and may be subject to seizure and penalty.”

Date of Decision: January 8, 2026