State can collect tax on BH series non-transport vehicles: Kerala High Court

Kerala High Court allows State governments to levy tax on BH-series vehicles, ruling against Central Government's legislation.

The Kerala High Court on Thursday (January 9, 2025) held that the State governments are free to levy tax in respect of Bharat Series (BH-series) non-transport vehicles at the rate prescribed under their respective Legislation.

The court while allowing a petition filed by employees of the Central Government Undertakings, including the Banks challenging the state motor vehicle department’s refusal to get their vehicles registered. Bharat Series (BH-series) were introduced to facilitate seamless transfer of vehicles from one state to another state for defence personnel ,central and state government employees and undertakings.

The court of Justice D.K.Singh also held that sub-rule (2) of Rule 51B of the Central Motor Vehicle Rules prescribing the rate of tax in respect of BH series non-transport vehicles is constitutionally unenforceable as it is beyond the legislative competence of the Centre. Therefore, the States are not bound to implement the rate of tax as prescribed in sub-rule (2) of Rule 51B of the Central Motor Vehicle (Twentieth Amendment) Rules 2021 for vehicles registered under the BH series.

The court noted that the Central Government may lay down the principles by enacting a law or by subordinate legislation for the taxes. However, the taxes on motor vehicles are the exclusive domain of the States under Article 246, read with Entry 57 of List II of the Seventh Schedule.