SC refuses to stay HC order quashing state's Act on vehicle tax

The Karnataka government on Monday failed to get a reprieve from the Supreme Court on its plea to impose tax on vehicles registered in other states but plying in Karnataka beyond 30 days.

A bench of Justices J S Chelameswar and Abhay Manohar Sapre refused to stay the Karnataka High Court's order quashing the provisions of the Karnataka Motor Vehicles Act as unconstitutional and ultra vires. The state law is also in conflict with the Union government's Motor Vehicles Act, which puts the limit of 12 months for imposing such tax.

“We are not passing any interim order. The state, where the vehicle is being run, is entitled to levy tax since its roads are used. The question, however, is if the state should collect tax from owners, who had already deposited it somewhere else,” the bench said, agreeing to examine the special leave petition filed by Karnataka.

Karnataka's Additional Advocate General Devadutt Karmat defended the amendment in the KMVA that allowed the state government to levy tax on vehicles registered outside Karnataka and which are in the state for more than 30 days.

He contended that if such vehicles were taken outside the state within a period of 12 months, the owners can claim refund of the tax.

He sought a stay of the Karnataka High Court's order of March 10, 2016.

Senior advocate C S Vaidyanathan, appearing for one of the writ petitioners before the high court, submitted that the state can levy short term tax but not lifetime tax.

Section 47 of the Motor Vehicles Act lays down that when a vehicle registered in one state has been kept in another state for more than 12 months, the owner of the vehicle shall apply for a new registration mark.

The high court had said lifetime tax levied during registration cannot be levied on a vehicle that is already registered, merely on presumption that a vehicle registered outside has remained in Karnataka for more than 30 days.

“This would result in the state directly varying the period prescribed under Section 47, of 12 months. The state legislature does not have the legislative competence to do so,” the HC has said.