The Kerala High Court recently held that State governments are free to levy tax at the rate prescribed by its laws when registering non-transport vehicles under Bharat Series (BH series) [Harish Kumar KP v. Union of India & Ors.].The BH series of vehicle registration was introduced by the Ministry of Road Transport and Highways in 2021. Vehicles bearing BH series registration marks do not need to get a new registration mark if the owner shifts residence from one State to another..Justice Dinesh Kumar Singh noted that as per Article 246 read with Entry 57 of List II of the Seventh Schedule of the Constitution of India, taxes on motor vehicles including the rate of tax fall within the exclusive domain of the States. Therefore, the Court held that Rule 51B(2) of the Central Motor Vehicle Rules, which prescribed the rate of tax for BH series non-transport vehicles, is constitutionally unenforceable as it is beyond the legislative competence of the Central government. "The States are free to levy tax at the rate prescribed under their respective legislation. Therefore, the States are not bound to implement the rate of tax as prescribed in subrule (2) of Rule 51B of the Central Motor Vehicle (Twentieth Amendment) Rules 2021 for vehicles registered under the BH series," the Court's judgment stated. However, the Court clarified that the Central government may lay down the principles for taxation on motor vehicles. "Sub-rule (1) and sub-rule (3) only provide the principles for motor vehicle tax. Therefore, sub-rule (3) does not transgress the legislative competence of the Centre in providing the principle for charging the motor vehicle tax on vehicles seeking BH series registration," the Court stated. .The judgment was passed on a batch of petitions moved by several persons whose requests for registering their new vehicles under the BH series was denied by State transport authorities. The authorities contended that all aspects of motor vehicles tax are covered under the provisions of the Kerala Motor Vehicle Taxation Act, 1976. The authorities also stated that the Central Motor Vehicle Rules (MV Rules) are beyond the legislative competence of the Centre, and that those Rules entrench upon the legislative power of the State and are void..The petitioners, however, contended that the Motor Vehicles Act (MV Act) a is Central legislation and that the State has no authority or jurisdiction in the matter relating to the registration of motor vehicles. Before the High Court, the Central government also took the stance that the State government is bound to implement the MV Rules. It was also submitted that only the principles for the levy of tax on motor vehicles have been laid down in the MV Rules, which is well within the powers of the Central government..The State government, however, submitted that the the subordinate legislation of the Central Government, i.e., the MV Rules, will not override the provisions of the State Act. Therefore, the MV Rules would not be operative so far as the registration of the motor vehicle under the BH series and taxes are concerned..After going through the relevant provisions of the Constitution with respect to the power of the Centre and States to enact legislation on various subjects, the Court held that while the petitioners have the right to get BH series registration for their vehicles, the State has the power to decide what rate of tax to levy on vehicles including BH series non-transport vehicles. .The Court, therefore, directed the State authorities to register the petitioners' vehicles under the BH series and charge taxes as per the provisions of the Kerala Motor Vehicle Taxation Act, 1976..The petitioners were represented by advocates George Varghese, Jaykar KS, S Muhammed Haneeff, K Shaj, Peeyus A Kottam, KJ Manu Raj, Thomas T Varghese, Ambily Premkumar and TR Vishnu.Deputy Solicitor General in-charge TC Krishna appeared for the Central government.Special Government Pleader Muhammed Rafique appeared for the State government..[Read Judgment]
