Allahabad HC Decines Plea Claiming Road Tax Exemption Should Be Allowed For Registration And Not Purchase Of Electric Vehicles In UP

The Petitioner had claimed that since road tax is levied for operating the vehicle within the State, no distinction can be made on the basis that the vehicle in question has been purchased within the State or from outside.

It had therefore challenged a condition imposed in exemption notification dated March 02, 2023 to the extent it mandates purchase of vehicles within the State of Uttar Pradesh.

The notification issued by the State government under Section 3 of the UP Motor Vehicle Taxation Act, 1997 stipulates that road tax on purchase of electric vehicles registered in the State shall be exempted from the date of notification of the Uttar Pradesh Electric Vehicle Manufacturing and Mobility Policy, 2022 i.e. October 14, 2022.

Petitioner claimed its vehicle was registered in UP and therefore, it is entitled to exemption.

The State on the other hand argued that while purchasing the vehicle in the State, the State gets its share of GST, whereas, when the vehicle is purchased from outside the State, the State does not get any benefit and therefore, the condition imposed cannot be said to be contrary to the Act and/or to the Scheme as such.

The High Court perused Section 3 (supra) and observed that it clearly reveals that the State Government may exempt either wholly or partly any motor vehicle from payment of any tax under the Act.

“The very fact that the aforesaid Section does not restrict the powers of the State in imposing condition, the plea raised seeking to question the condition imposed regarding purchase of vehicle cannot be countenanced,” a division bench of Chief Justice Arun Bhansali and Justice Vikas Budhwar said.

The Court also found substance in State's argument that part of revenue is lost when vehicle is purchased from outside the State and therefore, it held, “instead of making it open-ended exemption, the State is well within its power to impose the condition of purchase of vehicle within the State.”

Also read: Owner Of Electric Vehicle Purchased Prior To October 14, 2022 Can't Seek Refund Of Tax Citing Subsequent Exemption Notification: Allahabad HC

Appearance: Advocates Abhisek Rai, Hanuman Prasad Dube and Vipul Dube for Petitioner; Standing counsel Ankur Agarwal and Nimai Dass for Respondent

Case title: M/S Batra Henlay Cables v. State Of U.P. and 2 Others

Case no.: WRIT TAX No. - 1927 of 2024