Supreme Court Exempts Off-Road Construction Vehicles from Road Tax Ultratech Cement's Appeal Vindicated as Supreme Court Rules Against Taxation of Non-Road Vehicles
In a landmark judgment, the Supreme Court of India has ruled that heavy earth-moving machinery and construction equipment vehicles used exclusively within enclosed premises or factories are not subject to road tax under the Gujarat Motor Vehicles Tax Act, 1958. This decision came as a relief to Ultratech Cement Ltd., which had been embroiled in a legal tussle with the State of Gujarat over the taxation of their off-road vehicles.
The bench, comprising Justices Pankaj Mithal and Prasanna B. Varale, delivered the verdict on January 8, 2026, overturning the Gujarat High Court's decision which had previously upheld the state's demand for registration and taxation of such vehicles. The Supreme Court emphasized that vehicles like Dumpers, Loaders, Excavators, and Surface Miners used solely within factory premises do not qualify as "motor vehicles" under Section 2(28) of the Motor Vehicles Act, 1988, and therefore, are exempt from the road tax.
The judgment highlighted that the Constitution's Seventh Schedule, Entry 57 of List II, allows for taxation only on vehicles "suitable for use on roads." The court pointed out that Ultratech Cement's vehicles, transported in a dismantled state and confined to factory use, do not utilize public road infrastructure, thus falling outside the taxable category.
The court also referenced a 2020 circular from the Ministry of Road Transport and Highways, which clarified that vehicles not plying on roads are not "motor vehicles" requiring registration or taxation. Citing past judicial precedents, the court reaffirmed that vehicles not deriving benefit from public roads are exempt from such taxes.
This ruling not only impacts Ultratech Cement but also sets a precedent for similar cases across India, potentially affecting industries reliant on heavy machinery for operations within private premises.
Bottom Line:
Heavy Earth Moving Machinery and construction equipment vehicles used exclusively within enclosed premises or factories are not "motor vehicles" within the definition under Section 2(28) of the Motor Vehicles Act, 1988, and are not chargeable to road tax under the Gujarat Motor Vehicles Tax Act, 1958.
Statutory provision(s): Motor Vehicles Act, 1988 Section 2(28), Gujarat Motor Vehicles Tax Act, 1958 Section 3, Constitution of India Entry 57, List II, Seventh Schedule
Ultratech Cement Ltd. v. State of Gujarat, (SC) : Law Finder Doc Id # 2835315
