Karnataka High Court Quashes State's Decision To Exclude Private Sector Employees From BH-Series Registration For Vehicles

A single judge bench of Justice C M Poonacha allowed the petition filed by Ranjith K P who works in Fortinet Technologies India and Shalini T, who works at Accenture Solutions.

The court set aside the notification issued by the State government, dated 20.12.2021 by which private sector company employees, who are having offices in more than four or more states or Union Territories in India, were excluded from registration of new non-transport vehicles under the BH series excluded.

The Ministry of Road Transport and Highways (MoRTH) in August 2021 introduced a new registration mark for new vehicles called "Bharath Series (BH-Series)" - the marking will not require an assignment of a new registration mark when the owner of the vehicle shifts from one State to another.

As per the said Notification issued by the MorTH, the vehicle registration facility under BH-Series will be available on voluntary basis to defence personnel, employees of Central Government/State Government, Central/State Government Public Sector Undertakings, private sector companies/organizations which are having their offices in four or more States/Union Territories. However, Commissioner of Transport and Road Safety, Bangalore in December 2021 issued a separate notification excluding the private sector employees under BH-Series registration in the first phase.

The state government before court defended its notification on the grounds that there is a possibility of reduction in collection of State revenue and that the Department may not reach the target fixed by the State Government in collection of revenue.

It also argued that since most of the private employees are working on contract basis and they are frequently changing from one company to another, there is no guarantee of them working in the same company. It also submitted that there would be no provision to check the genuinity of documents issued by the private companies. Hence, the same would be a drawback to the State Government for collecting taxes, it contended.

The State also said it is empowered under Entry 57 to List II of the State List in 7th Schedule of the Constitution of India and is competent to levy and collect taxes on vehicles which is a State subject.

Findings

The bench noted that as per Section 64 of the Motor Vehicles (MV) Act, the Central government is empowered to make rules regarding registration of vehicles. The power under Section 65 of the MV Act specifies that the State government is entitled to make rules for the purpose of carrying into effect various aspects except matters specified in Section 64 of the MV Act.

"The power enumerated under Section 65 of the MV Act does not entitle the State to make any Rules/stipulation regarding registration of vehicles. Under the circumstances, it is clear that the Transport Authorities of the State cannot in any manner restrict the compliance in entirety of the Central Motor vehicles (twentieth Amendment) Rules, 2021 which has been issued vide notification dated 26.08.2021," said the court.

Noting that BH-Series registration was envisaged by Government of India to avoid the cumbersome process of citizens bringing NOC from one State and applying for new registration mark in the other State and then applying for refund of taxes from the previous State of transfer to another, the court said:

"The apprehension of the State of Karnataka that the private sector employees are working on contract basis and are frequently changing from one company to another, is not a ground not to adhere to the Notification dated 26.8.2021 in its entirety. It is open to the officers/officials of the State Government to scrupulously scrutinise the documents, so that the private sector employees who opt to register their vehicles under BH-Series registration satisfy the criteria as stipulated in the Notification dated 26.8.2021."

As regards the contention of revenue loss raised by the government. the bench referred to the reply given in Lok Sabha by Minister for Road Transport and Highways, Government of India, wherein it was said that "even though the motor vehicles shall pay tax for a period of 2 years or in multiples of it, at 25% higher rate and the same being remitted to respectiveState/Union Territory on-line and hence, there is no finance loss to the State exchequer."

"The stand of the State Government in issuing inter alia notification dated 20.12.2021 specifically excluding one class of persons i.e. "employees of private sector organisations, which have their offices in four or more States/Union territories, cannot in any manner be upheld having regard to the specific mandate of law," it added.

The court further said the attempt of the State government to deviate from MoRTH's notification cannot be sustained.

Allowing the petitions, the court directed the State Government to implement the Central MV Act (20th Amendment) Rules, 2021 issued vide notification dated 26.8.2021, regarding BH Series registration.

Case Title: Ranjith K P v. Principal Secretary To Government, Transport Department, Government of Karnataka.

Case No: WRIT PETITION NO.683 OF 2022 (MV) C/W WRIT PETITIONNO.2153 OF 2022 (MV).

Citation: 2022 LiveLaw (Kar) 522

Date of Order: 16-12-2022

Appearance: Advocate Pradeep Kumar J for petitioner.

HCGP Jyothi Bhat for R1 To R3.

Advocate GURURAJ YADRAVI, FOR R5.

H SHANTHI BHUSHAN, ASG FOR R4.