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by sayum
07 July 2026 8:26 AM
In a significant interpretation of the Andhra Pradesh Motor Vehicle Taxation Act, 1963, the Supreme Court on August 29, 2025, delivered a vital ruling, holding that motor vehicles operated exclusively within a restricted, access-controlled industrial premises are not liable for motor vehicle tax under Section 3 of the A.P. Act, 1963. The Court clarified that a “public place” must mean a location where the public has a right of access, and merely being within a government-owned facility does not convert private premises into public space.
The bench comprising Justices Manoj Misra and Ujjal Bhuyan set aside a Division Bench judgment of the Andhra Pradesh High Court, restoring the decision of the Single Judge which had earlier directed a refund of ₹22,71,700 to the appellant for the tax paid under protest.
"Presence Of Government Company Does Not Convert Private Industrial Premises Into A Public Place"
The Court categorically held that “when the members of the public are not allowed access inside an area without prior permission and when there is check on ingress and egress to ensure that no unauthorized person has access to the premises, the same would be an enclosed premise and not a ‘public place’” [Para 45].
Referring to the central dispatch yard of Visakhapatnam Steel Plant (RINL), the Court noted the premises were enclosed, guarded by CISF personnel, and entry was regulated through gate passes. It was therefore held to not qualify as a public place under Section 2(34) of the Motor Vehicles Act, 1988, which defines a public place as “a road, street, way or other place... to which the public have a right of access”.
M/s. Tarachand Logistic Solutions Ltd., a logistics provider, was contracted by Rashtriya Ispat Nigam Limited (RINL) for handling operations within its central dispatch yard located in the premises of Visakhapatnam Steel Plant. From April 1, 2021, 36 vehicles owned by the company were exclusively deployed within the premises and did not ply on public roads.
Despite the vehicles being confined within RINL’s closed premises, the local Regional Transport Officer raised a demand for motor vehicle tax amounting to ₹22,71,700. The appellant paid the tax under protest and sought exemption under Section 3 of the A.P. Motor Vehicle Taxation Act, 1963. Upon rejection by the transport authorities and the appellate authority, the appellant approached the High Court.
A Single Judge allowed the petition, holding that a restricted industrial premises was not a public place. However, the Division Bench reversed the decision, holding that RINL being a government company made the premises a public place and emphasized Rule 12A of the A.P. Motor Vehicle Taxation Rules, which creates a deeming fiction of use unless prior intimation is given.
The key legal issue was whether motor vehicles exclusively operated within a non-accessible, enclosed government industrial facility could be considered as used or kept for use in a “public place” under Section 3 of the A.P. Act, 1963. The Court examined multiple provisions:
Section 3 of the A.P. Act mandates motor vehicle tax only on vehicles “used or kept for use in a public place.”
Rule 12A of the A.P. Rules creates a presumption of “use” unless the owner gives written intimation.
Section 2(34) of the M.V. Act defines “public place” based on right of public access.
The Court observed that “the expression ‘public place’ qualifies and limits both ‘used’ and ‘kept for use’”, thereby excluding any private or restricted premises from tax liability under Section 3.
Importantly, the Court clarified that Rule 12A, being subordinate legislation, cannot override the parent statute. It held:
“Requirement of law is that the motor vehicle should be used or kept for use in a ‘public place’. When admittedly the motor vehicles of the appellant were confined for use within the RINL premises which is a closed area, then the question of the vehicles being used or kept for being used in a ‘public place’ does not arise.” [Para 47]
On this reasoning, the Court found the Division Bench erred in placing reliance on Rule 12A in isolation, without reconciling it with the charging provision under Section 3.
Rule 12A Cannot Expand Tax Liability Beyond Section 3 The Court rejected the State’s reliance on Rule 12A, which creates a legal fiction deeming vehicles “kept for use” unless prior intimation is given:
“Rule 12A has to be interpreted in such a way so as to be in sync with Section 3... The words appearing in Rule 12A i.e. ‘a motor vehicle shall be deemed to be kept for use’ has to be read as ‘a motor vehicle deemed to be kept for use in a public place’.” [Para 47]
The Court held that Rule 12A must be construed narrowly and in harmony with the charging section, reaffirming that tax statutes must be strictly interpreted and cannot be expanded through subordinate rules.
Reliance on Bolani Ores Affirmed, Akhil Gujarat Distinguished
The judgment heavily relied on Bolani Ores Ltd. v. State of Orissa [(1974) 2 SCC 777], wherein it was held that vehicles operating solely within leasehold or private industrial premises are not liable to pay motor vehicle tax. The Court emphasized:
“If the public have no right of access to any place which is not a road, street, way or thoroughfare, it will not be a ‘public place’.” [Para 31]
Conversely, the Court distinguished the decision in State of Gujarat v. Akhil Gujarat Pravasi V.S. Mahamandal [(2004) 5 SCC 155], on which the High Court Division Bench had placed reliance. The Supreme Court observed:
“The expressions ‘public place’ or ‘public road’ are conspicuously absent [in Akhil Gujarat]. Whether a motor vehicle is used or kept for use in a ‘public place’ in the State... was not an issue in Akhil Gujarat.” [Para 34]
Tax Must Be Authorized By Law, Not Presumed: Article 265 of Constitution
Reiterating the principle under Article 265 of the Constitution, the Court stressed that “no tax shall be levied or collected except by authority of law”. The Court observed:
“There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. A subject is not to be taxed unless the words of the relevant taxing statute unambiguously impose the tax on him.” [Para 37]
It also cited Commissioner of Customs v. Dilip Kumar [(2018) 9 SCC 1] to emphasize that taxing statutes must be strictly construed, and that States cannot burden citizens with taxation beyond what is expressly provided by law.
Holding that RINL premises were not a “public place”, and that the vehicles never ventured outside those premises during the contract period, the Supreme Court concluded:
“The motor vehicles in question were used or kept for use only within the restricted premises of RINL... Therefore, the said vehicles are not liable to be taxed for the period the said vehicles were used or kept for use within the restricted premises of RINL.” [Para 50]
Accordingly, the Court:
Set aside the Division Bench’s order dated 19.12.2024
Restored the judgment of the learned Single Judge dated 13.06.2023
Directed refund of ₹22,71,700 to the appellant
This decision is a reaffirmation of the fundamental principle that tax can only be levied when the precise statutory conditions are met, especially in fiscal matters. The Supreme Court has clearly established that operating vehicles within enclosed, non-public industrial areas does not attract motor vehicle tax under the A.P. Act, 1963, and that statutory fictions such as Rule 12A must yield to the clear limitations imposed by charging sections.
By doing so, the Court has provided essential clarity to transport operators, industries, and government authorities on the limits of tax liability based on actual and intended use in public spaces.
Date of Decision: August 29, 2025
