Rajasthan HC Quashes One-Time Tax Demands And Seizures Of Out-of-State Private Cars, Citing Missing Section 4(1)(c) Notification

The petitioners challenged Rajasthan’s demands for one-time road tax and the seizure or impounding of their non-transport private vehicles registered in other States.

The State asserted that the vehicles had been kept or used in Rajasthan for more than 30 days and were therefore taxable under Section 4(1)(b) of the Rajasthan Motor Vehicles Taxation Act, 1951 (“1951 Act”), read with Rule 28 of the Rajasthan Motor Vehicles Taxation Rules, 1951 (“1951 Rules”) and the notification dated 10 July 2024.

In the lead case, the petitioner’s Haryana-registered vehicle was intercepted, challaned and impounded, with release made conditional on payment of tax.

The connected petitions raised common questions and were heard and decided together.

Article 265 of the Constitution prohibits the levy or collection of tax without authority of law; a valid tax must have statutory authority and a legally prescribed rate.

Section 4(1)(b) of the 1951 Act provides for one-time tax on non-transport vehicles, while Section 4(1)(c) separately governs vehicles registered outside Rajasthan and using roads in the State, with rates to be notified in the Official Gazette.

Rule 28(i) of the 1951 Rules provides an exemption for qualifying private vehicles registered outside Rajasthan and brought temporarily into the State for no more than 30 days; the Rule cannot independently create a tax liability without a valid charging provision and prescribed rate.

The Court relied on *Mathuram Agrawal v. State of Madhya Pradesh*, (1999) 8 SCC 667, for the requirement that a taxing statute identify the subject, taxpayer and rate; *Ahmedabad Urban Development Authority v. Sharadkumar Jayantikumar Pasawalla*, (1992) 3 SCC 285, for the rule that fiscal legislation cannot be enlarged by implication; *Consumer Online Foundation v. Union of India*, (2011) 5 SCC 360, on the need for a rate prescribed as required by law; and *Bimal Chandra Banerjee v. State of Madhya Pradesh*, (1970) 2 SCC 467, and *M/s Tarachand Logistic Solutions Ltd. v. State of Andhra Pradesh*, 2025 SCC OnLine SC 1851, on the limits of subordinate legislation in imposing tax.

The Court treated clauses (b) and (c) of Section 4(1) as governing distinct fields: clause (b) applied to non-transport vehicles of Rajasthan, while clause (c) was the relevant provision for vehicles registered outside the State.

Although the notification dated 10 July 2024 referred to clauses (a) and (c), the Court found that it did not prescribe a rate under clause (c) for out-of-State non-transport private vehicles; its provisions concerning vehicles already registered in or outside the State could not cure that omission.

Nor could Rule 28 supply the missing authority to tax.

Because no applicable Section 4(1)(c) notification was produced, the demands and impounding lacked a valid statutory basis.

The Court also set out the relevant safeguards under Sections 8A, 13, 13A and 17, including recorded satisfaction, an opportunity to be heard, lawful recovery and a statutory basis for stopping or seizing a vehicle.

It quashed the lead petitioner’s challan and demand letter dated 17 March 2025 and directed that any tax recovered from the petitioners be refunded within 30 days after production of the judgment.

The connected writ petitions were disposed of on the same basis, and pending applications were also disposed of.