Motor Vehicle Act | Excavators, Dumpers, Etc Used Inside Factories Are Not Motor Vehicles To Attract Road Tax : Supreme Court

The Supreme Court has ruled that Heavy Earth Moving Machinery (HEMM) and construction equipment like Excavators, Dumpers, Loaders, and Dozers used exclusively within a factory or enclosed premises are not "motor vehicles" under Section 2(28) of the Motor Vehicle Act and hence not liable to pay road tax.

Allowing the Ultratech Cement Ltd. plea, a bench of Justices Pankaj Mithal and Prasanna B Varale set aside the Gujarat High Court's decision that had upheld the state's demand for crores in road tax on such machinery, despite these HEMM's being used in the enclosed premises to facilitate an operation of the Ultratech's plant sites.

“we are of the conclusive opinion that the vehicles used by the appellants are vehicles of special types, precisely construction equipment vehicles which are suitable and are meant for use for operation and use within the industrial area/factory premises/ defined enclosed premises and are not meant for use on roads or public roads. They are off-road equipments and as such stand excluded not only from the purview of the “motor vehicle” as defined under Section 2 (28) of the Act but also from tax as Entry 57 of List II of the Seventh Schedule of the Constitution only authorizes taxation of vehicles suitable for use on roads only. They are not even chargeable to road tax in view of Schedule I to Section 3 (1) of the Gujarat Tax Act which do not prescribes any tax for such kind of vehicles i.e., construction equipment vehicles.”, the court held.

The dispute arose when the Gujarat Transport Department, citing a 1999 press advertisement, demanded that Ultratech Cement get its Dumpers, Loaders, Excavators, Surface Miners, and Rock Breakers, used within its cement plants in Kutch and Rajkot, registered as motor vehicles and pay road tax under the Gujarat Motor Vehicles Tax Act, 1958. The demand, with interest and penalty, totalled approximately ₹1.36 crores for periods from 1999 onward.

Ultratech contested, arguing these machines were never used on public roads. They were transported in knocked-down condition on trailers to the plant sites and operated only within enclosed industrial premises. The company submitted certificates from manufacturers like Bharat Earth Movers Ltd. and Automotive Research Association of India, confirming these were off-road equipment for which no road-worthiness certificate was even issued.

The Gujarat High Court in 2011 rejected Ultratech's plea, holding the machinery was "motor vehicles" and thus taxable. The company appealed to the Supreme Court.

Setting aside the impugner order, the judgment authored by Justice Mithal categorized HEMMs as "special type vehicles" designed for off-road industrial use and fell squarely within an exclusionary clause in the definition of "motor vehicle."

The Court referred to its latest decision in Tarachand Logistic Solutions Limited vs. State of Andhra Pradesh & Ors, 2025 LiveLaw (SC) 852 to observe that “if a motor vehicle is not used in a public place or is not kept for use in a public place and the person concerned is not deriving any benefit from the public infrastructure, he should not be burdened with the motor vehicle tax.”

Accordingly, the appeal was allowed, and the demand of road tax was set aside, adding that “if any such kind of vehicles are found using roads, they would not be free from the rigors of Section 2 (28) of the Act and Section 3 of the Gujarat Tax Act and may also be subject to proceedings for seizure and penalty in accordance with the law.”

Cause Title: ULTRATECH CEMENT LTD. VERSUS THE STATE OF GUJARAT & ORS.

Click here to download judgment

Appearance:

For Appellant(s)/ Item 121 Mr. P. Chidambaram, Sr. Adv.(argued by)

Item 121.1, 121.2 Mr. Nakul Dewan, Sr. Adv. (argued by) Mr. Mahesh Agarwal, Adv. Mr. Ankur Saigal, Adv. Mr. Rohan Talwar, Adv. Mr. Himanshu Saraswat, Adv. Mr. Uday Aditya Jetley Pocha, Adv. Mr. Sathvik Chandrashekar, Adv. Mr. Naman Agarwal, Adv. Mr. E. C. Agrawala, AOR

For Respondent(s) Mr. K. Parameshwar, Sr. Adv. (argued by) Ms. Deepanwita Priyanka, AOR Mr. Prasad Hegde, Adv. Ms. Veda Singh, Adv. Ms. Priyal Sheth, Adv.