Rajasthan High Court Declares Tax Collection on Out-of-State Vehicles Illegal

Jaipur, November 3 (Daily Kiran) : The Rajasthan High Court has ruled that the state’s transport department’s attempts to collect road tax from privately registered vehicles from other states are illegal. This decision, made on November 3, 2026, stems from claims that the tax was levied on vehicles that had been operating in Rajasthan for over 30 days without any specific legal notification.

A bench consisting of Chief Justice Sanjay K. Agarwal and Justice Sameer Jain stated that the transport department cannot impose or collect taxes on non-commercial vehicles registered in other states without a valid notification under the relevant legal provisions.

The court’s ruling followed petitions filed by Harpi Core Network India Private Limited and others, directing the transport department to refund the collected taxes within 30 days and to return any seized vehicles immediately.

Many vehicle owners had challenged the actions of the transport department in the High Court, claiming their vehicles were registered in states such as Haryana, Delhi, Punjab, Gujarat, Uttar Pradesh, and Madhya Pradesh.

Petitioners argued that they had already paid a lifetime road tax in their respective states at the time of registration. However, during routine inspections, aerial units of the Rajasthan transport department stopped several of these vehicles and initiated enforcement actions.

The transport department contended that these vehicles had been operating in Rajasthan for more than 30 days without paying the required state road tax. They cited Rule 28 of the Rajasthan Motor Vehicle Taxation Rules, asserting that vehicles staying in the state for over 30 days are subject to taxation under the Rajasthan Motor Vehicle Taxation Act of 1951.

Challenging the department’s actions, petitioners maintained that since their vehicles were already registered in other states and had paid the applicable lifetime tax, there was no legal basis for demanding a one-time tax simply because the vehicles had been in Rajasthan for an extended period.

They also referenced Article 265 of the Constitution, which states that no tax can be imposed or collected without the authority of law. The petitioners argued that the transport department could not levy taxes based solely on administrative interpretations or notifications that did not specifically authorize such taxes.

In defense of its actions, the state government, led by Chief Minister Bhajanlal Sharma, argued that the use of out-of-state registered private vehicles in Rajasthan for over 30 days made them liable for taxation under existing regulations. The government pointed to a notification issued on July 10, 2024, which set tax rates for non-commercial vehicles, claiming it also applied to vehicles registered in other states. Therefore, they argued that the tax demand and vehicle seizures were legally justified.

After hearing both sides, the High Court concluded that while the July 10, 2024, notification established tax rates for passenger and freight vehicles, there was no separate notification authorizing a one-time tax specifically for privately registered non-commercial vehicles from other states.