Rajasthan High Court Quashes Challenge Against State Amendment Imposing New Motor Vehicle Tax On “Sleeper Bus”

The Rajasthan High Court rejected the challenge made to an amendment brought in by the Transport Department by which a new category of “sleeper bus” was added for levying motor vehicle tax, taking it out from the previous category without qualifying it for the exemptions available under other categories.

The division bench of Justice Vinit Kumar Mathur and Justice Anuroop Singhi held that the “bus” fell in the definitions under Sections 2(7) and 2(29) of the Rajasthan Motor Vehicles Act, 1988, and once the type or class of vehicle was categorised further based on seating capacity/berth arrangement as per body types defined under the Rajasthan Motor Vehicle Rules, 1990, the State was within its right to categorize such vehicle for tax imposition.

Furthermore, the Court observed that the different rate of taxes was kept based on intelligible differential of the class of vehicles and the area of their operation, hence, there was no violation in imposing different tax rates on sleeper buses as compared to other buses.

The petitioner had a bus with body type “sleeper” registered under a valid contract carriage permit. A notification that came in 2019 imposed motor vehicle tax based on class of vehicle and seating capacity and petitioner's vehicle fell under a category that attracted certain exemptions.

Pursuant to a notification in 2021, tax rates were altered and a new category of “sleeper bus” was introduced, with a new tax rate without any exemptions. A petition was filed by the petitioner, wherein among other pleas, it was demanded that the amendment be declared de-hors the law.

It was submitted by the petitioner that under Rajasthan Motor Vehicles Taxation Act, 1951, State government was empowered to ley tax only based on the class of motor vehicles and their seating capacity, while as per Section 41 of the Motor Vehicles Act, only Central Government could notify classes of vehicles.

However, by introducing “sleeper bus” a separate class, based on body type, was created by the State, acting beyond its legislative competence.

Further, it was argued that even if the class was created, not granting exemption vis a vis other category of buses was not correct.

After hearing the contentions, the Court firstly held that insertion of new category of bus could not be said to be anything more than specifying the rate of motor vehicle tax payable which was within the domain of the State. Once the class of vehicle was mentioned, its further categorisation as per body types defined under the Rules, was well within State's right.

“Since the “Sleeper Coach” is defined in Rule 7.14A of the Rajasthan Motor Vehicles Rules, 1990, therefore, there is no difficulty in creation of the same for the purpose of taxation by the respondent-State…State Government was very much within its competence in creating a new taxable category based on body-type of the vehicle…”

Hence, it was observed that since class or type was not newly created, and it was only a category that was created falling under the type and class mentioned in the Central Statute, the State was well within its domain to create a separate category in a particular class or type.

Further, the Court opined that State was fully competent to impose different tax rates based on intelligible differentia, and also to extend exemptions to a particular category while denying it to the other, keeping in mind the larger public interest, the nexus and the object sought to be achieved.

“reasoning given by the State Government for grant of exemption to the category of vehicles at S.No.7(a) (i) and (ii) is that in order to promote the plying of buses with seating capacity in the Revenue Divisional Limits, the exemptions have been granted and the same has not been extended to the sleeper buses mentioned in the category at S.No.7(a)(iii) so as to avoid competition with those persons who are running their buses in the revenue divisional limits.”

Accordingly, the demand under the petition, requesting the amendment to be declared de-hors the law was quashed.

Title: Khuman Singh v State of Rajasthan & Ors., and other connected matters

Citation: 2025 LiveLaw (Raj) 284

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