Summary and Analysis of M/s Tarachand Logistic Solutions Limited vs State of Andhra Pradesh & Ors 2025 INSC 1052
1. Heading of the Judgment
M/S. Tarachand Logistic Solutions Limited vs. State of Andhra Pradesh & Ors.
Supreme Court Judgment on Liability to Pay Motor Vehicle Tax for Vehicles Used Exclusively in a Private, Restricted Area.
Bench: Hon'ble Justices Manoj Misra and Ujjal Bhuyan
Judgment Date: August 29, 2025
2. Related Laws and Sections
The judgment interprets and applies the following laws:
The Andhra Pradesh Motor Vehicles Taxation Act, 1963 (A.P. Act, 1963)
Section 3(1): The core "charging section." It authorizes the government to levy a tax on every motor vehicle "used or kept for use, in a public place in the State."
Section 4(1)(b): Allows for a refund of tax if a vehicle has not been used at all during the period for which tax was paid.
Section 2(j): States that words not defined in this Act shall have the same meaning as in the Motor Vehicles Act, 1988.The Motor Vehicles Act, 1988 (M.V. Act)
Section 2(34): Defines "public place" as "a road, street, way or other place, whether a thoroughfare or not, to which the public have a right of access..."The Andhra Pradesh Motor Vehicles Taxation Rules, 1963 (A.P. Rules, 1963)
Rule 12A: Creates a deeming provision. It states that a motor vehicle is "deemed to be kept for use" and is liable for tax unless the owner gives a written intimation before the start of a quarter that the vehicle "shall not be used" after the expiry of the current tax period.The Constitution of India
Article 265: Mandates that "No tax shall be levied or collected except by the authority of law." This is the foundation for strictly interpreting tax laws.
Entry 57, List II (State List): Grants states the power to levy taxes on vehicles suitable for use on roads.
3. Basic Judgment Details
Case Number: Civil Appeal No. 11188 of 2025 (Arising out of SLP (Civil) No. 1547 of 2025)
Court: Supreme Court of India
Bench: Hon'ble Justices Manoj Misra and Ujjal Bhuyan
Judgment Date: August 29, 2025
Judgment: Allowed the appeal filed by M/s. Tarachand Logistic Solutions Ltd.
Result: The Supreme Court set aside the Division Bench's order and restored the favorable order of the Single Judge of the Andhra Pradesh High Court.
4. Explanation of the Judgment
The appellant company, Tarachand Logistic, had a contract to operate within the secured premises of the Visakhapatnam Steel Plant (owned by RINL). They used 36 vehicles exclusively inside this enclosed central dispatch yard, which had guarded gates and no public access. The company argued that since their vehicles never went on public roads, they should be exempt from paying the state motor vehicle tax for that period.
The tax authorities demanded and collected the tax, arguing that the Steel Plant's premises constituted a "public place" because RINL is a government company. They also relied heavily on Rule 12A, stating that since the company did not formally intimate the complete non-use of the vehicles, they were "deemed" to be in use and liable for tax.
The Single Judge of the High Court ruled in favor of the company, but the Division Bench reversed that decision. The company then appealed to the Supreme Court.
The Supreme Court's Reasoning and Decision
The Supreme Court allowed the company's appeal and provided a clear explanation:
1. The Charging Section (Section 3) is Supreme:
The Court emphasized that the power to tax comes only from the law, specifically the charging section—Section 3(1) of the A.P. Act, 1963.
This section imposes tax only if a vehicle is "used or kept for use in a public place." The phrase "in a public place" is crucial and limits the scope of the tax.
2. Meaning of "Public Place":
Since the A.P. Act does not define "public place," the Court used the definition from the Motor Vehicles Act, 1988 (Section 2(34)).
A "public place" is a place "to which the public have a right of access."
The Court found that the Visakhapatnam Steel Plant's central dispatch yard is a highly restricted area. Access is controlled by CISF personnel, and no member of the public can enter without authorization. Therefore, it is not a "public place."
3. Rule 12A Cannot Override Section 3:
The tax authorities argued that under Rule 12A, a vehicle is deemed to be "kept for use" (and thus taxable) unless the owner intimates its complete non-use.
The Supreme Court rejected this argument. It held that a rule (subordinate legislation) cannot override the main Act (primary legislation).
The purpose of Rule 12A is to aid Section 3, not replace it. The words "kept for use" in Rule 12A must be read in context and mean "kept for use in a public place." Since the vehicles were not in a public place, Rule 12A did not apply.
4. Nature of the Tax is Compensatory:
The Court noted that motor vehicle tax is compensatory in nature. It is a charge for using public infrastructure like roads and highways.
If a vehicle is not using these public facilities, as in this case, the very reason for levying the tax disappears. It would be unfair to charge a person for a benefit they are not deriving.
5. Distinguishing Precedents:
The Court clarified that the case of Bolani Ores Ltd. (a three-judge bench decision) was directly applicable, as it held that vehicles used solely within enclosed private premises are not taxable.
The case of Akhil Gujarat Pravasi V.S. Mahamandal, relied upon by the tax authorities, was found to be irrelevant. That case dealt with a different law (Bombay Act) that did not contain the critical words "in a public place" in its charging section.
Final Outcome
The Supreme Court held that:
The central dispatch yard of RINL is not a "public place."
The appellant's vehicles, used exclusively within this yard, were not liable to pay motor vehicle tax under Section 3 of the A.P. Act for that period.
The demand for tax was invalid.
The Division Bench's order was set aside, and the Single Judge's order directing the refund of the tax amount (₹22,71,700) to the company was restored.