State Cannot Levy Road Tax On Out-Of-State Private Vehicles Without A Notification U/S 4(1)(c) Motor Vehicles Taxation Act: Rajasthan High Court
The Court quashed challans and impounding of out-of-State private cars, holds July 10, 2024 notification does not meet Section 4(1)(c) requirements and Rule 28 cannot independently create tax liability.
Chief Justice Sanjay K. Agrawal, Justice Sameer Jain, Rajasthan HC (Jaipur Bench)
The Rajasthan High Court, Jaipur Bench has held that, to levy tax on a vehicle registered outside the State and brought into Rajasthan, a notification under Section 4(1)(c) of the Rajasthan Motor Vehicles Taxation Act, 1951 is required. Finding that no such notification exists for private non-transport vehicles, the Court held that the State has no authority to tax them.
The Court held that the notification dated July 10, 2024 does not satisfy Section 4(1)(c) for private cars, since it covers only goods and passenger vehicles. It added that Rule 28 of the Rules of 1951 cannot create a tax liability that the parent charging provision does not validly impose. The impugned challans, demands and impounding were therefore quashed.
A Division Bench of Chief Justice Sanjay K. Agrawal and Justice Sameer Jain observed, “In case of the vehicle from outside the State of Rajasthan, levy of tax would be at the rates specified in notification under Section 4(1)(c) of the Act of 1951. Therefore, in order to levy onetime road tax on vehicle registered outside the State and brought into the State of Rajasthan, an appropriate notification under Section 4(1)(c) of the Act of 1951 is required to be issued. However, it is apparent from the record that the State Government has issued notification in exercise of powers in Clauses (a) and (c) in respect of goods vehicles and passenger vehicles, but the State Government has failed to bring on record any notification issued under Section 4(1)(c) of the Act of 1951, applicable in the case of non-transport vehicles like cars, which are meant for private use (excluding taxi used as passenger vehicle). In absence of notification prescribing rates of tax payable by those vehicle owners falling within the mischief of provisions contained in Rule 28(1)(i) of the Rules of 1951, levy of road tax would be unauthorized under the law”.
Advocate Sandeep Pathak appeared for the petitioner and S.S. Naruka, AAG appeared for the respondent.
The petitions challenged the State’s demand of tax on private vehicles registered in other States. In the lead case, a Haryana-registered car was intercepted by the Flying Squad and the owner was directed to deposit Rs. 6,78,274 for its release. The vehicle was impounded. The State argued that the vehicles had been kept in Rajasthan beyond the 30-day exemption under Rule 28(i), so tax was payable under Section 4(1)(b) read with the notification of July 10, 2024.
The petitioners filed a batch of writ petitions seeking quashing of the demand and a declaration that vehicles with one-time tax paid elsewhere are not liable under Section 4(1)(b). Because the questions were common, the petitions were heard together, with the Harpy Core Network petition as the lead case.
The Bench began with Article 265 of the Constitution of India, which bars levy or collection of tax without authority of law. Placing reliance on Mathuram Agrawal v. State of Madhya Pradesh (1999) 8 SCC 667, it noted that the statute must clearly convey the subject of tax, the person liable and the rate. It held that Section 4(1)(b) applies to Rajasthan-registered vehicles, while Section 4(1)(c) is the separate charging clause for out-of-State vehicles, and that the two operate in distinct fields.
The Court observed that the 2024 notification, issued under clauses (a) and (c), covered only goods and passenger vehicles. Proviso (iv), it held, cannot dispense with a Section 4(1)(c) notification. It also held that delegated legislation may regulate procedure but cannot impose tax where the Act does not.
Quashing the challan and letter dated March 17, 2025, the Court directed that any tax recovered be refunded within 30 days of production of a copy of the order. All petitions were disposed of, and the judgment applies mutatis mutandis to all connected matters.
Cause Title: Harpy Core Network India Private Limited v. State of Rajasthan and Ors. (Neutral Citation: 2026:RJ-JP:43947-DB)
Appearances:
Petitioners: Sandeep Pathak, Jaya P. Pathak, Utkarsh Meena, Anushree Agarwal, Advocates.
Respondents: S.S. Naruka, AAG, Sachin Singh Rathore, Akshay Bhardwaj, Advocates.