States can decide motor tax, says SC

The Supreme Court has ruled that the state governments can impose "lifetime tax" on motor vehicles based on their weight or cost. Tamil Nadu applied the weight-cum-value index.

Karnataka used the value principle. The court upheld both rules and stressed that these formulas did not violate the principle of reasonable classification and there was no discrimination.

The Madras High Court had quashed the state law. The state government moved the Supreme Court, which struck down the high court judgment. The Karnataka High Court had upheld a similar state law there and the Supreme Court Bench headed by Justice Santosh Hegde upheld the high court view.

"For administrative reasons in the matter of collection of tax, one-time payment of tax is convenient and at the same time, it is also beneficial to users of vehicles who do not have to go to the office of the road transport office every year to pay the annual taxes," the judgment said.

Justifying the levy, the Bench pointed out that "the cost of maintenance as well as the cost of material used in the maintenance of the roads increases by the day. This naturally costs the state, which has to find funds for making new roads and for maintenance of the existing ones. The tax is regulatory and compensatory."

Weight or cost of the vehicle alone may not be the right way to compute the levy. Sometimes, a heavy vehicle may cost less and a light vehicle more. Therefore, the formula for the levy should be left to the government, the Supreme Court said.

The state governments had the power to do so, the Bench added.