In a pivotal ruling, the Kerala High Court has affirmed the authority of state governments to levy taxes on vehicles registered under the Bharat Series (BH series) as per their own laws, overriding centrally prescribed rates. This decision highlights the constitutional balance of power between the States and the Centre regarding motor vehicle taxation.
The BH series, introduced in 2021 by the Ministry of Road Transport and Highways, allows vehicle owners to move across state lines without the hassle of re-registration. However, Justice Dinesh Kumar Singh, presiding over the case, emphasized that Article 246 and Entry 57 of List II of the Constitution’s Seventh Schedule grant States exclusive rights to impose taxes on motor vehicles, including determining tax rates.
Consequently, the court deemed Rule 51B(2) of the Central Motor Vehicle Rules—which sets tax rates for BH series vehicles—constitutionally invalid. Justice Singh clarified that while the Centre may outline principles for motor vehicle taxation under sub-rules (1) and (3) of Rule 51B, the actual taxation rates fall firmly within the jurisdiction of State governments.
The judgment arose from a batch of petitions filed by individuals whose attempts to register new vehicles under the BH series were denied by Kerala’s transport authorities. The State argued that its Motor Vehicle Taxation Act of 1976 governs all aspects of vehicle taxation and asserted that the Central Rules could not supersede state legislation.
The petitioners contended that the Motor Vehicles Act, as a central law, takes precedence. However, the High Court sided with the State, ruling that while vehicle owners are entitled to BH series registrations, the taxes applicable must align with the Kerala Motor Vehicle Taxation Act.
The court directed the State to register the petitioners’ vehicles under the BH series but affirmed its right to levy taxes per its legislation, ensuring state sovereignty in fiscal matters remains intact.
