Heavy Earth Moving Machinery Not 'Motor Vehicles' Liable For Road Tax: Supreme Court

A Bench of Justice Pankaj Mithal and Justice Prasanna B. Varale held,

“We are of the conclusive opinion that the vehicles used by the appellants are vehicles of special types, precisely construction equipment vehicles which are suitable and are meant for use for operation and use within the industrial area/factory premises/ defined enclosed premises and are not meant for use on roads or public roads. They are off-road equipments and as such stand excluded not only from the purview of the “motor vehicle” as defined under Section 2 (28) of the Act but also from tax as Entry 57 of List II of the Seventh Schedule of the Constitution only authorizes taxation of vehicles suitable for use on roads only.”

The common question of law addressed by the Court was whether HEMM or special services vehicles such as Dumpers, Loaders, Excavators, Surface Miners, Dozers, Drills, and Rock Breakers are 'motor vehicles' within the ambit of Section 2 (28) of the Act.

The Appeals were filed by UltraTech Cement Ltd., a public limited company engaged in the manufacturing and marketing of clinker and cement products. At its cement plants in Gujarat, the company uses various HEMM, predominantly Dumpers, Loaders, Excavators, and Surface Miners.

The dispute began when the Transport Commissioner published a press advertisement in 1999 directing the registration of all special service vehicles and the payment of road tax. While the company protested that these vehicles were not 'motor vehicles' as defined under the Act, the Gujarat High Court dismissed their Petitions in 2011, holding they were chargeable to tax

The Court's Reasoning: Inclusive vs. Exclusive Definitions

The Supreme Court analysed Section 2 (28) of the Act, noting that it consists of two parts: the first part is inclusive, and the second part is exclusive. While the definition includes mechanically propelled vehicles "adapted for the use upon roads," it expressly excludes:

“...a vehicle of a special type adapted for use only in a factory or in any other enclosed premises.”

The court found that the vehicles in question are "vehicles of special types, precisely construction equipment vehicles which are suitable and are meant for use for operation and use within the industrial area/factory premises/defined enclosed premises and are not meant for use on roads or public roads."

Evidence from manufacturers and suppliers, such as Bharat Earth Movers Limited, confirmed these vehicles are designed for "mining and industrial off-road operations" and are transported to sites on trailers because they lack a "road worthiness certificate".

Constitutional Limitations on Taxation

The Bench emphasized that Entry 57 of List II of the Seventh Schedule of the Constitution only authorises the State to tax vehicles "suitable for use on roads." The court observed that the power to impose a tax on motor vehicles is regulatory and compensatory in nature and is intended for vehicles that use state roads.

The bench clarified that the Gujarat Tax Act "cannot travel beyond Entry 57... so as to tax vehicles which are not suitable for being used on roads".

Furthermore, it stated that Schedule I of the Gujarat Tax Act "prescribes no rate of tax on construction equipment vehicles".

Concluding that if a vehicle does not use the public roads, it cannot be taxed, the Supreme Court allowed the appeals. The top court clarified that while these machines are technically 'motor vehicles' under the inclusive part of the definition, they stand excluded by the second part due to their "nature of use and the place of the use."

The impugned judgments were set aside, and the Supreme court noted that such vehicles would only be subject to the rigors of the Act if they were found using roads.

Case Title: Ultratech Cement Ltd. v. The State Of Gujarat & Ors.

Case Number: Civil Appeal No. 3357 of 2017 and Civil Appeal No. 3358 of 2017

Citation: 2026 LLBiz SC 9