Gujarat High Court on Deemed Use of Vehicles and Motor Vehicle Tax Liability

Introduction

The Gujarat High Court, in Gordhanbhai Virjibhai Roy Vs State of Gujarat & Ors, has clarified the legal consequences of not filing a statutory non-use declaration in relation to motor vehicle tax under the Gujarat (Bombay) Motor Vehicles Tax Act, 1958 (GMV Tax Act). The Court upheld the levy of vehicle tax for a long past period on a bus registered in Diu but found operating within Gujarat, applying the deeming provision contained in Section 3(2) of the GMV Tax Act.

The writ petition challenged tax demands raised for the period 2013–2023 on a passenger bus bearing registration No. DD-02-9061, originally registered in Diu. The assessee argued that the authorities had simply presumed continuous use of the vehicle in Gujarat without proof, while the State relied heavily on statutory presumptions, fitness and alteration rules, and the assessee’s failure to produce legally required documents.

The High Court ultimately rejected the petition and declined to interfere with the impugned tax orders.

Factual Background

Vehicle Details and Registration

• The assessee is the owner of a passenger bus bearing registration No. DD-02-9061, registered with the Regional Transport Office, Diu.
• As per the registration certificate dated 27.09.2005, the vehicle was originally approved as a 40 + 1 seater bus (i.e., 41 persons seating capacity), manufactured by Eicher.

Entry into Gujarat and Initial Tax Payment

• On 25.07.2023, when the bus entered Gujarat, the assessee paid Gujarat motor vehicle tax of Rs.20,376/- for the period 25.07.2023 to 01.08.2023.
• A check-post e-receipt was issued by the Transport Department, Government of Gujarat for this period.
• The assessee admitted that after 01.08.2023, the bus remained in Gujarat for around one and a half months beyond the period covered by that payment and expressed willingness to pay tax for that specific overstay.

Detention and Penalty

• On 06.09.2023, the bus was intercepted and detained by the authority at Surat.
• A challan was issued alleging offences under Sections 177, 180 and 181 of the Motor Vehicles Act, 1988 (MV Act), and a penalty of Rs.11,500/- was imposed.
• The detention memo recorded that though VAHAN records showed 42 seating capacity, the bus was physically found as a sleeper bus with 38 berths.

Subsequent Proceedings

1. Application for Release under Section 207(2)

   • On 06.06.2024, the assessee moved an application before the competent authority under Section 207(2) of the MV Act requesting release of the vehicle on payment of all fines and composite tax of Gujarat Government for the period 01.08.2023 to 06.09.2023.

2. First Writ Petition

   • The assessee initially approached the High Court by filing Special Civil Application No.14345 of 2024 when the vehicle was not released.
   • During the pendency of that matter, the respondent authority passed an order dated 22.01.2025, levying arrears of tax from 01.01.2013 to 31.09.2023 amounting to Rs.53,20,000/-.
   • In view of this order, the assessee withdrew the writ petition to challenge the tax levy in appropriate proceedings.

3. Appeal Before Appellate Authority

   • The assessee filed an appeal on 10.02.2025 under Section 14 of the GMV Tax Act read with Rule 29 of the Gujarat (Bombay) Motor Vehicles Tax Rules, 1959.
   • However, the appeal remained at the filing stage because the assessee did not make the 25% pre-deposit mandated under Rule 20 of the **Gujarat Motor Vehicles Tax Rules, 1989 (GMV Tax Rules, 1989).

4. Enhanced Demand

   • By a notice dated 28.03.2025, the tax demand was stated to have been enhanced to Rs.1,30,54,235/-.