Kochi: The Kerala High Court has ruled that vehicles registered as goods carriage vehicles cannot be reclassified under a different category for demanding one-time tax under the second proviso to Section 3(1) of the Kerala Motor Vehicles Taxation Act.

A division bench comprising Justices AK Jayasankaran Nambiar and Easwaran S stated that the transport department cannot alter its position and classify vehicles differently solely to levy a one-time tax.

The case involved an appeal by the registered owner of four goods carriage vehicles. These vehicles were granted registration certificates as goods carriage vehicles and were taxed under the schedule applicable to such vehicles under the Kerala Motor Vehicles Taxation Act, 1976.

The appellant challenged the demand by the taxing authorities to pay one-time tax by reclassifying the vehicles as construction equipment vehicles. The appellant argued that the department had already accepted the classification of the vehicles as goods carriage vehicles for regular motor vehicle tax and could not change this classification for one-time tax purposes.

The transport department defended its position, stating that the demand was based on a circular issued by the Transport Commissioner, which clarified that goods carriage vehicles used as construction vehicles are liable to pay one-time tax.

The court sided with the appellant, emphasising that the revenue department must maintain consistency in tax classification. It noted that the Kerala Motor Vehicles Taxation Act has a separate entry for construction equipment vehicles. If the department believed the vehicles should be classified as construction equipment vehicles, it should have taxed them accordingly under the relevant schedule from the outset.

The court ruled that the department cannot selectively alter its classification to impose a one-time tax. The appeal was allowed, and the demand for one-time tax was set aside.