Gujarat High Court Rejects Bus Owner's Plea Over ₹53 Lakh Vehicle Tax Demand For Lack Of Non-Use Certificate

The Gujarat High Court has rejected a bus owner's plea against a ₹53.20 lakh vehicle tax demand, holding that the statutory presumption of use in Gujarat applied because he had not obtained a certificate declaring the bus as unused.

A Division Bench comprising Justice A.S. Supehia and Justice Vaibhavi D. Nanavati held that Section 3(2) of the Gujarat Motor Vehicles Tax Act, 1958, creates a deeming fiction unless the prescribed authority certifies that a vehicle was not used or kept for use in the state.

“Thus, in absence of certificate certifying that the petitioner vehicle/bus was not used or kept for use in Gujarat, the deeming fiction of Section 3(2) of the GMV Tax Act gets triggered, and it has to be presumed that the bus was used from 2013 onwards to 2023 in Gujarat State,” the court ruled.

The case concerned Gordhanbhai Virjibhai Roy, owner of passenger bus DD-02-9061, registered in Diu. The bus was detained in Surat on September 6, 2023 after authorities found that the driver could not produce the required documents.

The authorities later raised a tax demand of ₹53.20 lakh for the period from January 1, 2013 to September 2023. This was subsequently enhanced to ₹1.30 crore through a March 28, 2025 notice.

Roy argued that the demand rested only on an assumption that the bus had been operated in Gujarat. He claimed the bus was brought into the state only temporarily and that tax was paid for the periods when it was used in Gujarat. He relied on a ₹20,376 e-receipt covering July 25 to August 1, 2023.

The court found that no receipts for tax payments between July 2013 and August 2023 had been produced, apart from that single receipt. It also noted that Roy had admitted the bus overstayed in Gujarat by about one-and-a-half months from July 25, 2023.

The state pointed out that the bus's fitness certificate was valid only until January 12, 2013, with no subsequent certificate on record. It also submitted that Roy had not produced any permit authorising the bus to ply in Gujarat or the prescribed Form-NT declaring that the vehicle was not in use.

The court found further irregularities in the vehicle. Its registration certificate showed a seating capacity of 40+1, but inspection found that it had been converted into a 38-berth sleeper bus.

The chassis had been manually punched and appeared to be that of an Ashok Leyland vehicle, while the registration records identified Eicher as the manufacturer. The engine also carried an Ashok Leyland symbol, and the chassis number did not appear in the manufacturer's records.

Examining the expression “used or kept for use”, the court relied on the Supreme Court's ruling in State of Gujarat v. Akhil Gujarat Pravasi V.S. Mahamandal.

It observed that actual physical use is not decisive for determining tax liability. A vehicle that is capable of being used and kept available for use in the state can attract tax even if it is not actually being driven at a particular point.

The statutory scheme provides vehicle owners a mechanism to establish non-use. They have to submit the prescribed declaration, certified by the competent authority, specifying the period during which the vehicle was not being used. Roy had produced no such form from either Gujarat or Diu.

The court therefore held that the deeming fiction under Section 3(2) applied. It also noted that Roy attempted to pay ₹2.23 lakh to the Diu RTO on July 17, 2024 for the 2013-2023 period. The amount was refunded because the bus had been blacklisted, and the bench described the payment attempt as an afterthought because it came after the bus was detained and proceedings had begun.

Roy also argued that the Revenue had to prove that the bus was actually used in Gujarat during the entire period. The court rejected the argument, observing that he first had to produce documents showing that he had obtained the required permission for the alterations and, after the alterations, secured a fitness certificate and paid the vehicle tax.

“The production of these records is a prerequisite to shifting the evidentiary burden,” the bench observed, adding that Roy could not rely on arguments about the department's burden without first producing the required statutory documents.

The bench further noted that Roy had not challenged the calculation of the tax. His challenge was to the levy itself for the 2013-2023 period.

The tax was calculated under the First Schedule and applicable government notifications, after adjusting the amount already paid by Roy while the bus was being plied in Gujarat.

The Gujarat High Court ultimately rejected the writ petition.

For Petitioner: Advocate D.K. Nakrani and Ms. Kaushal D. Nakrani

For Respondents: Raj Tanna, AGP