The Kerala High Court on Thursday, January 9, 2025, ruled that the state governments have the right to decide the tax rates for Bharat Series (BH-series) on non-transport vehicles. These rates can be set according to the respective state laws and policies.
The court’s decision came in response to a petition filed by employees of Central Government undertakings, including banks. They had challenged the state motor vehicle department’s refusal to register their vehicles under the BH-scheme. The Bharat series was introduced to make it easier for vehicles to move from one state to another, particularly benefiting defence personnel, as well as employees of central and state governments and similar undertakings.
Justice D.K. Singh, who heard the case, declared that sub-rule (2) of Rule 51B of Central Motor Vehicle Rules is unconstitutional. This rule set tax rates for BH-series vehicles, but the court held that the Centre does not have the authority to enforce it. As a result, states are not obligated to follow the tax rates prescribed under this rule for vehicles registered with BH plates.
The court explained that while the Central Government can set principles or guidelines through laws or subordinate legislation, the power to levy taxes on motor vehicles belongs solely to the states. This comes under Article 246 and Entry 57 of List II in the Seventh Schedule of the Constitution.
“The Central Government may lay down the principles by enacting a law or by subordinate legislation. However, the taxes on motor vehicles are the exclusive domain of the States under Article 246, read with Entry 57 of List II of the Seventh Schedule. The tax includes the rate of tax. Therefore, the Central Government would not have the power to prescribe for rate of tax on motor vehicles,” the Court held.
What is BH Registration?
The Bharat Series (BH-series) was introduced in 2021, by the Central Government. The primary intention was to make the transfer of vehicles across states easy and transparent. The scheme would particularly benefit defence personnel and central government employees. Other officials of the state public sector undertaking and private companies with offices in four or more states/ union territories could also qualify for the scheme.
As per Section 47 of the Motor Vehicles Act, a vehicle registered in a state would need to be re-registered in another state if it is being used in it for more than 12 months. The BH series alleviates the need for such re-registrations and makes life easy for people who do frequent relocations.
Tax Slab Prescribed By The Centre For BH Registrations
The Central Motor Vehicles (Twentieth Amendment) Rules 2021 introduced Rule 51B which specifies the rate of taxation for the BH program. It is as follows.
- Invoice price Below Rs 10 lakhs – 8% of invoice price
- Rs 10-20 lakhs – 10%
- Above Rs 20 lakh – 12%
Diesel vehicles will have to pay an additional tax of 2%. On the other hand, a 2% cut can be availed on electric vehicles. The BH series gives owners a more manageable approach to paying road taxes. Usually, the 15-year sum is paid upfront. If choosing BH plates, this can be paid in instalments, easing the customer’s financial burden.
Bottom Line
Kerala imposes slightly higher taxes on automobiles, compared to other models. The new ruling would likely facilitate the same. According to it, vehicles can be registered under the BH series but the taxes must be paid according to the Kerala Motor Vehicle Taxation Act, 1976.
