Kerala HC: Goods Carriage Vehicles Cannot Be Reclassified as Construction Equipment for One-Time Tax

The Kerala High Court ruled that vehicles registered as Goods Carriage Vehicles cannot be reclassified as Construction Equipment Vehicles solely to levy a one-time tax.

A transport company, Vee Tee Logistics, had registered four vehicles as Goods Carriage Vehicles and paid taxes under the Kerala Motor Vehicles Taxation Act, 1976. Subsequently, the Transport Department tried to reclassify these vehicles as Construction Equipment Vehicles and demanded a one-time tax, claiming that they were being used for construction purposes.

Contesting the same demand the counsel of the applicant claimed that the tax authorities should carry consistency in classification and taxation.

The counsel of the applicant claimed that as the vehicles were already levied to tax under the Goods Carriage Vehicles category, the authorities could not arbitrarily revise their classification to impose additional tax.

Under Annexure 1 of the Kerala Motor Cars Taxation Act, cars used in construction must pay a one-time tax, according to a circular issued by the Transport Commissioner, which the Transport Department cited.

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The counsel of the department claimed that the vehicles though registered as Goods Carriage Vehicles, were functionally being used as Construction Equipment Vehicles and should be levied to tax as per that.

The bench including Justice A. K. Jayasankaran Nambiar & Justice Easwaran S. noted that if the Transport Department intended to categorize the vehicles as Construction Equipment Vehicles, then they should have done the same during initial registration and tax assessment.

Already the vehicles have been categorized and levied to tax under one class, therefore the authorities cannot revise their classification to impose an additional tax. Also, the court distinguished this case from earlier rulings quoted via the government, ruling that those cases concerned different factual circumstances.

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The reclassification has been rejected by the court and held that the government could not revise the classification of the vehicle post already taxing the same under a distinct category. The writ plea has been permitted by the court.