No Road Tax Without Public-Place Nexus: Supreme Court aligns Rule 12A with Section 3 of the A.P. Motor Vehicles Taxation Act

Case: M/s. Tarachand Logistic Solutions Limited v. State of Andhra Pradesh & Ors., 2025 INSC 1052 (Supreme Court of India, 29 August 2025)

Bench: Ujjal Bhuyan J. (Author), Manoj Misra J.

Disposition: Appeal allowed; Division Bench judgment set aside; Single Judge’s order restored; no costs.

Introduction

This decision settles a recurring controversy under the Andhra Pradesh Motor Vehicles Taxation Act, 1963 (A.P. Act, 1963): when does a vehicle become liable for road tax? The Supreme Court holds that the charging provision—Section 3—imposes tax only on vehicles “used or kept for use, in a public place in the State.” If vehicles are confined to access-controlled, non-public premises, they are outside the tax net for that period. A crucial corollary is that Rule 12A of the A.P. Motor Vehicles Taxation Rules, 1963 cannot expand the scope of Section 3; it must be read to apply only to use or intended use “in a public place.”

The appellant, a logistics company operating heavy vehicles within the Central Dispatch Yard (CDY) of the Visakhapatnam Steel Plant of RINL—an access-restricted, CISF-guarded industrial facility—sought exemption from motor vehicle tax for periods when its vehicles never plied on public roads. While a Single Judge granted relief, a Division Bench reversed the decision relying on a deeming presumption under Rule 12A and on Akhil Gujarat Pravasi V.S. Mahamandal. The Supreme Court has now restored the Single Judge’s order and clarified the law.

Background and Procedural History

Business and contract: The appellant, incorporated in 1956 and in logistics since 1985, was awarded a contract (17.11.2020; work order 19.01.2021) for handling and storage of iron and steel within the CDY at RINL (Visakhapatnam Steel Plant).
Vehicle deployment: 36 registered vehicles, with taxes, fitness, insurance, and PUC validly in place, were deployed exclusively inside the CDY. From 01.04.2021, they were not to be used on public roads during the contract period.
Premises: The CDY is walled, ingress/egress controlled by CISF, and not accessible to the general public without authorization.
Exemption requests: Letters dated 07.12.2020 and 05.10.2021 sought exemption under Section 3, asserting non-use on public roads.
Demands and payments under protest:
- Demands on 16.11.2021 totaling Rs. 22,71,700; paid under protest amidst seizure threats.
- Further demand for 01.04.2022–30.06.2022 and 01.07.2022–20.09.2022; Rs. 11,77,890 paid under protest after appellate authority refused interim relief (27.08.2022).
First writ (W.P. No. 6206/2022): Single Judge (26.04.2022) directed consideration of exemption representations; non-coercive steps in the interim.
Rejection by RTO: Order dated 14.06.2022 held RINL premises to be a public place because it is a government company; added that actual road use is irrelevant.
Appeal to Deputy Transport Commissioner: Dismissed (27.08.2022), resting on Rule 12A’s presumption and absence of stoppage intimation.
Second writ (W.P. No. 38285/2022): Single Judge allowed the petition (13.06.2023), ordered refund of Rs. 22,71,700, holding CDY is not a public place.
Division Bench (W.A. No. 711/2023): Reversed on 19.12.2024; emphasized Rule 12A’s deeming fiction and Akhil Gujarat Pravasi; held actual use immaterial.
SLP and interim order: Supreme Court stayed the Division Bench ruling on 24.01.2025, though not allowing enforcement of the Single Judge’s directions pending appeal.

Issues

Whether vehicles confined to the RINL Central Dispatch Yard—an access-controlled industrial facility—are “used or kept for use, in a public place” within Section 3 of the A.P. Act, 1963.
Whether Rule 12A’s deeming presumption (“kept for use” unless advance non-use intimation is filed) can expand tax liability beyond the “public place” limitation in Section 3.
Whether precedents like Bolani Ores, Travancore Tea Estates, Akhil Gujarat Pravasi, and Aravind Ramakant Modawdakar control the outcome.

Summary of the Judgment

The Supreme Court allowed the appeal and restored the Single Judge’s ruling. It held:

Section 3 is the charging provision; the taxable event is use or intended use “in a public place.”
“Public place” is defined by Section 2(34) of the Motor Vehicles Act, 1988—places to which the public have a right of access. The RINL CDY, with CISF-controlled entry and no public access as of right, is not a public place.
Motor vehicle tax being compensatory, there must be a nexus with use of public infrastructure. No such nexus exists when vehicles are confined to a non-public, enclosed industrial premises.
Rule 12A must be read “for the purpose of Section 3.” It cannot enlarge the tax base beyond the charging section. The phrase “kept for use” in Rule 12A must be understood as “kept for use in a public place.”
Even absent a Rule 12A non-use intimation, vehicles not used or kept for use in any public place are not taxable for that period. Section 4(1)(b) separately enables refunds for periods of non-use.
Akhil Gujarat Pravasi is distinguishable because the Bombay Act’s Section 3A did not contain the “public place” limitation; Bolani Ores is directly applicable.

Statutory Framework

Entry 57, List II (Seventh Schedule, Constitution): Taxes on vehicles “suitable for use on roads” fall within State competence, subject to Entry 35 List III.
Section 3, A.P. Act, 1963 (Charging Section): Tax is levied on motor vehicles “used or kept for use, in a public place in the State.”
Section 4(1)(b): Refund mechanism where a vehicle “has not been used” for the whole or part of a paid period (minimum one month), subject to notified conditions.
Section 2(j), A.P. Act, 1963: Undefined terms adopt meanings from the Motor Vehicles Act, 1988.
Section 2(34), Motor Vehicles Act, 1988: “Public place” means a road, street, way, or other place to which the public have a right of access; includes passenger stands.
Rule 12A, A.P. Rules, 1963: Deeming presumption that a vehicle is “kept for use” unless advance written intimation of non-use is given to the licensing officer.
Article 265, Constitution: No tax shall be levied or collected except by authority of law; strict construction of charging provisions applies.

Precedents Cited and Their Influence

1) Bolani Ores Ltd. v. State of Orissa, (1974) 2 SCC 777

A three-Judge Bench, interpreting a similar scheme, held that a “public place” is one where the public have a right of access. Enclosed, access-controlled industrial premises are not public places merely because they are not fenced everywhere. Vehicles like dumpers operating solely within such premises were not taxable as long as they did not use public roads. This ratio is central to Tarachand Logistics—RINL’s CDY is an access-restricted enclave, hence not a public place.

2) Travancore Tea Estates Co. Ltd. v. State of Kerala, (1980) 3 SCC 619

The Court aligned the charging phrase “used or kept for use in the State” with Entry 57 by reading it as “used or kept for use on the public roads of the State.” Taxability hinges on a public-road nexus. This supports the Supreme Court’s insistence that Section 3’s “public place” limitation cannot be diluted.

3) State of Gujarat v. Akhil Gujarat Pravasi V.S. Mahamandal, (2004) 5 SCC 155

The Gujarat High Court had invalidated provisions requiring advance payment of tax on designated omnibuses; the Supreme Court reversed, upholding validity. Crucially, the impugned Bombay Act provision (Section 3A) lacked the “public place” qualifier. The ratio—that actual use is unnecessary once tax liability attaches—does not answer when liability attaches under an Act where “public place” is a condition precedent. Hence, it is inapposite here and cannot be used to negate Section 3’s explicit condition.

4) State of Kerala v. Aravind Ramakant Modawdakar, (1999) 7 SCC 400

The Court held that once a vehicle is liable to tax, the extent of its use is immaterial. Applied here, it adds nothing until liability under Section 3 is first established by a “public place” nexus. It was therefore rightly distinguished.

5) Commissioner of Customs v. Dilip Kumar, (2018) 9 SCC 1

A Constitution Bench reiterated strict interpretation of taxing statutes and the prohibition on taxation by implication. This principle anchors the Court’s approach: Rule 12A cannot expand the tax base where the charging section limits it to “public place” use or intended use.

Legal Reasoning

1) The taxable event under Section 3: use or intended use “in a public place”

The Court identifies the “core” of Section 3: the tax is imposed only when a vehicle is used or kept for use “in a public place.” “Kept for use” imports intention; the vehicle must be intended for use in a public place, not merely owned or registered in the State. This aligns with the compensatory character of road tax: the levy presupposes a link to usage (or intended usage) of public infrastructure like roads and highways.

2) What is a “public place”?

By Section 2(34) of the Motor Vehicles Act, a public place is one to which the public have a right of access. The RINL CDY—walled, gate-controlled, guarded by CISF, and issuing gate passes only to authorized personnel—denies such a right of access. It is thus not a public place. The fact that RINL is a government company does not convert its restricted premises into a public place.

3) Harmonizing Rule 12A with Section 3

Rule 12A opens with “for the purpose of Section 3.” It creates a rebuttable presumption that a vehicle is “kept for use” unless advance non-use intimation is filed. The Court offers two complementary readings to keep Rule 12A within the parent Act’s limits:

Reading in the statutory condition: “Kept for use” in Rule 12A must be read as “kept for use in a public place.” The rule cannot erase Section 3’s “public place” qualifier.
Functional view: Non-use intimation is a procedural device for administrability, but it cannot establish tax liability where the substantive condition—public-place use or intended use—is absent. In a case of continuous confinement within non-public premises, failure to file a stoppage report does not create liability by fiction.

4) Article 265 and strict construction

Tax can only be levied and collected by authority of law. The charging section defines the authority and its limits. The Court refuses to infer liability by implication or by broadening the rule language beyond the statute. This is entirely consistent with Dilip Kumar and long-standing canons on taxing statutes.

5) Refund mechanics

Section 4(1)(b) envisages refunds for non-use for the whole or part of a paid period (not less than one month), subject to notified conditions. While the Single Judge ordered refund of Rs. 22,71,700 (the amounts paid under protest against initial demands), the Court’s reasoning supports the principle that amounts collected for periods of exclusive non-public-place use are refundable through statutory mechanisms.

Impact and Implications

A. Immediate doctrinal clarifications

Public-place nexus is mandatory: Under the A.P. Act, 1963, tax liability arises only if the vehicle is used or intended to be used in a public place.
Rule 12A read down: The deeming presumption cannot be invoked to tax vehicles confined to non-public premises merely for want of a stoppage report. Procedural presumptions yield to the charging section’s express scope.
Akhil Gujarat Pravasi distinguished: Where the parent statute lacks a “public place” limitation, advance tax and non-use regimes may be upheld; but where the charging text embeds “public place,” that condition governs.

B. Practical effects for industry and government

Industrial enclaves: Vehicles operating exclusively within access-controlled installations—steel plants, refineries, mines, ports, airports (airside), power plants, SEZs—are not taxable for periods they do not use or are not intended to use public places. Businesses can structure operations without incurring road tax during such periods.
Compliance and evidence: Although non-use intimation is not determinative, owners should maintain robust evidence to substantiate exclusive internal use, such as:
- Gate pass logs and CISF/security records;
- GPS data and geofencing reports showing confinement;
- Work orders limiting use to internal premises;
- Affidavits from facility authorities confirming restrictions;
- Photographs/site plans and internal movement logs.
Refund processing: Section 4(1)(b) provides the pathway. The Transport Department may issue clarifications on evidentiary standards and formats for efficient processing.
Revenue administration: Authorities should align notices, assessments, and audit practices with the “public place” requirement. Rule 12A can still be used to manage presumptions in ordinary cases, provided it is applied consistently with Section 3.
Policy recalibration: If the State seeks to tax vehicles purely on suitability or ownership, it would require legislative change to the charging provision; subordinate rules cannot achieve this result.

C. Broader jurisprudential significance

Strict construction reaffirmed: The Court reiterates that charging sections in tax laws are to be construed literally; no intendment or equitable expansion is permissible.
Compensatory-tax rationale emphasized: The judgment reconnects vehicle tax with the compensatory logic: the levy reflects the burden of using public infrastructure. Without such use or intended use, taxation is unwarranted.
Subordinate legislation tethered: The limits of rule-making vis-à-vis charging provisions are clearly demarcated. Deeming provisions cannot displace explicit statutory conditions.

Complex Concepts Simplified

Public place: A location the general public can access as of right—public roads, streets, ways; not private or access-controlled areas where entry requires permission.
Used or kept for use: “Used” means actual operation; “kept for use” refers to intention to operate. Under Section 3, both must relate to a public place.
Compensatory tax: A levy justified by the use (or intended use) of state-provided facilities; the quid pro quo is not exact but there must be a real nexus to public infrastructure.
Charging section: The provision that creates tax liability. Its language strictly governs who/what is taxed and when; rules cannot expand it.
Deeming provision: A legal fiction used to streamline administration (e.g., presuming “kept for use” absent intimation). It cannot contradict or outrun the parent statute’s express limits.
Non-use (stoppage) intimation: A procedural mechanism under Rule 12A to rebut presumptions in ordinary cases. Helpful but not a prerequisite where the charging condition is inherently absent.
Refund under Section 4(1)(b): If a vehicle has not been used for a qualifying period for which tax was paid, the owner can claim a refund, subject to conditions notified by the Government.

Applied Guidance for Stakeholders

For vehicle owners/operators in restricted premises

Document exclusive internal use comprehensively; keep contemporaneous records to rebut presumptions if needed.
Consider filing non-use intimations as a best practice, even though not legally determinative, to pre-empt disputes.
When mixed use occurs (occasional egress onto public roads), segment periods of use versus non-use; pay proportionately and seek partial refunds where eligible.
Where taxes were paid under protest for non-public-place periods, pursue refunds under Section 4(1)(b) with evidence packs.

For Transport Departments

Calibrate assessments and automated demands to the “public place” condition; avoid relying solely on registration status or ownership.
Issue SOPs specifying acceptable proofs for exclusive internal use and refund processing timelines.
Train field officers on the limits of Rule 12A’s presumption post this judgment.

For contract drafters and in-house counsel

Embed clauses constraining vehicle movement to internal premises where intended; require corroborative records from the principal (e.g., CISF logs, gate pass data).
Stipulate tax treatment in commercial terms, clarifying when road tax is not recoverable from clients for internal-only periods.

Conclusion

The Supreme Court’s ruling restores first principles to the A.P. vehicle tax regime. By insisting on a public-place nexus embedded in Section 3 and by harmonizing Rule 12A within that boundary, the Court prevents subordinate legislation from expanding tax liability by presumption. Vehicles confined to access-controlled, non-public premises are not taxable for those periods—even absent a formal stoppage report. The judgment rededicates the levy to its compensatory purpose and reaffirms the constitutional discipline of Article 265 and strict construction of charging provisions.

Key Takeaways

Under Section 3 of the A.P. Act, 1963, liability arises only when a vehicle is used or intended to be used in a public place.
“Public place” means a location with a public right of access; restricted industrial campuses like the RINL CDY are not public places.
Rule 12A’s deeming provision must be read as “kept for use in a public place” and cannot create liability where the public-place condition is absent.
Akhil Gujarat Pravasi does not apply where the charging section itself requires a public-place nexus; Bolani Ores directly governs.
Refunds for non-use periods are available under Section 4(1)(b); authorities should align processes and evidentiary standards accordingly.