Rajasthan HC Quashes One-Time Tax Demands And Seizures Of Out-Of-State Private Cars For Lack Of Section 4(1)(c) Rate Notification

The petitioners’ non-transport private vehicles were registered outside Rajasthan.

Rajasthan authorities intercepted some vehicles, alleging that they had been kept or used in the State for more than 30 days without payment of tax, and demanded one-time tax; vehicles were also seized or impounded in some cases.

The petitioners challenged the demands and enforcement action, arguing that no tax could be imposed on out-of-State private vehicles without a rate notification under Section 4(1)(c) of the Rajasthan Motor Vehicles Taxation Act, 1951 (“1951 Act”).

The State relied on Section 4(1)(b), Rule 28(i) of the Rajasthan Motor Vehicles Taxation Rules, 1951 (“1951 Rules”), and the notification dated 10 July 2024.

The Court heard the petitions together and treated Harpy Core Network India Private Limited as the lead case.

Article 265 of the Constitution requires a valid legislative charge and a determinable rate or measure of tax; where the statute requires rates to be notified, the levy cannot stand without the prescribed notification.

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

Rule 28(i) of the 1951 Rules exempts qualifying out-of-State private vehicles used or kept in Rajasthan for no more than 30 days; the Court held that the Rule could not independently impose tax without a valid charging provision and prescribed rate.

The Court relied on Mathuram Agrawal v. State of Madhya Pradesh, (1999) 8 SCC 667; Ahmedabad Urban Development Authority v. Sharadkumar Jayantikumar Pasawalla, (1992) 3 SCC 285; Consumer Online Foundation v. Union of India, (2011) 5 SCC 360; Bimal Chandra Banerjee v. State of Madhya Pradesh, 1970 (2) SCC 467; Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan, 1962 SCC OnLine SC 21; and M/s Tarachand Logistic Solutions Ltd. v. State of Andhra Pradesh, 2025 SCC OnLine SC 1851, for the principles that taxation requires clear statutory authority and subordinate legislation cannot enlarge a charging provision.

The Court treated clauses (b) and (c) of Section 4(1) as operating in distinct fields: clause (b) could not be used to tax vehicles registered outside Rajasthan where clause (c) specifically governed them.

Although the 10 July 2024 notification referred to vehicles registered in the State or another State, the Court found that it did not prescribe, under Section 4(1)(c), rates applicable to out-of-State non-transport private vehicles; its provisions concerning one-time tax could not cure that omission.

Rule 28(i)’s provision for taxation after a vehicle exceeded the 30-day period likewise could not supply the missing statutory rate or create an independent tax liability.

Accordingly, the impugned demand and seizure lacked authority under the 1951 Act.

The Court also discussed the safeguards in Sections 8A, 13, 13A and 17 concerning assessment, recovery and seizure.

In the lead case, it quashed the challan and letter dated 17 March 2025; it directed that any tax recovered from the petitioners be refunded within 30 days of production of the judgment.

All connected writ petitions were disposed of, with the judgment to apply mutatis mutandis to the connected matters.