In a critical ruling, the Kerala High Court upheld the state’s authority to levy motor vehicle taxes on Bharat Series (BH-series) vehicles, emphasizing that the central government cannot prescribe uniform tax rates under the series. The judgment, delivered by Justice D.K. Singh, reasserted the constitutional framework that places taxation within the jurisdiction of state governments.
Background of the Case
The dispute arose from multiple writ petitions, including WP(C) Nos. 7972/2024, 421/2024, 5010/2022, and others, filed by government employees, public sector undertakings, and private sector employees eligible for the BH-series. The petitioners challenged the Kerala Transport Authority’s refusal to register their vehicles under the BH-series, introduced by the Ministry of Road Transport and Highways (MoRTH) in 2021. The BH-series aimed to facilitate seamless interstate vehicle transfers by eliminating the need for re-registration upon relocation.
The petitioners contended that the refusal to implement the BH-series violated their mobility rights and the principles of the Central Motor Vehicle Rules, 1989. They sought a direction from the court to compel the state to comply with the BH-series registration framework.
Key Legal Issues
1. Constitutional Authority over Taxation:
– Whether the central government can prescribe uniform motor vehicle tax rates for BH-series vehicles or if the power solely resides with state governments.
2. Implementation of the BH-Series Registration:
– Whether the state’s refusal to register vehicles under the BH-series violated the provisions of the Central Motor Vehicle Rules, 1989, and the Motor Vehicles Act, 1988.
3. Interplay of Central and State Powers:
– The extent to which central government policies can dictate or limit state taxation authority in the context of vehicle registration.
Court’s Observations
Justice D.K. Singh made several important observations in his judgment:
– State Autonomy in Taxation:
“Motor vehicle taxation is a state subject under the Seventh Schedule of the Constitution of India. Any attempt by the central government to impose a uniform tax structure encroaches upon the fiscal autonomy of the states.”
– Purpose of BH-Series Registration:
“The BH-series is undoubtedly a progressive step to facilitate seamless mobility for citizens. However, its implementation cannot undermine the constitutional mandate that vests taxation powers with the states.”
– Harmonization, Not Supersession:
“The central government’s rules must work in harmony with state laws. They cannot supersede or bypass the legislative competence of the state governments in matters of taxation.”
Court’s Decision
After deliberating on the submissions by both parties, the court reached the following conclusions:
1. Registration Must Be Permitted:
The court directed the Kerala Transport Authorities to allow registration of BH-series vehicles in the state, ensuring that eligible citizens benefit from the scheme.
2. Taxation Authority Rests with the State:
The court ruled that the central government cannot impose uniform tax rates for BH-series vehicles. Motor vehicle tax must be levied as per the state’s existing tax regime.
3. Balance Between Mobility and Taxation:
The judgment underscored the need to balance citizen mobility rights with the state’s fiscal responsibilities, ensuring that neither is compromised.
Notable Quotes from the Judgment
– On State Sovereignty:
“The right of the state to impose taxes is an essential component of its sovereignty. No scheme, however well-intentioned, can dilute this fundamental principle.”
– On Seamless Mobility:
“The BH-series serves as a vital tool to reduce bureaucratic hurdles, but it must operate within the constitutional framework.”
Representation and Counsel
– Petitioners: Advocates George Varghese, Satyendra Kumar Jha (party-in-person), S. Muhammed Haneeff, and others represented the petitioners.
– Respondents: Special Government Pleader (Taxes) Muhammed Rafiq and Deputy Solicitor General T.C. Krishna appeared for the state and central government, respectively.
