In ULTRATECH CEMENT LTD. V. The State of Gujarat and ORS, the Bench holds off-road heavy machinery deployed exclusively inside enclosed industrial premises falls outside Motor Vehicles Act definition and State road tax liability.
New Delhi, January 9, 2026: The Supreme Court of India has held that heavy earth-moving machinery and construction equipment such as excavators, dumpers, loaders and dozers, when used exclusively within enclosed factory or industrial premises, do not fall within the definition of “motor vehicles” under Section 2(28) of the Motor Vehicles Act, 1988, and are therefore not liable to pay road tax.
A Bench comprising Justices Pankaj Mithal and Prasanna B. Varale delivered the judgment on 9 January 2026, allowing an appeal by UltraTech Cement Ltd. against a 2011 Gujarat High Court ruling upholding the State’s demand for over ₹1.36 crore in road tax on such machinery.
Background of the Dispute
The dispute originated from a demand by the Gujarat Transport Department that UltraTech Cement register its heavy equipment, including excavators, dumpers, surface miners and rock breakers, as motor vehicles and pay road tax under the Gujarat Motor Vehicles Tax Act, 1958. The tax demand, including interest and penalties, related to machinery used at the company’s Kutch and Rajkot plant sites from 1999 onwards.
UltraTech contested the demand, arguing that these machines were transported to its plant sites in dismantled form on trailers and operated only within enclosed industrial premises, with no use on public roads. The company also placed on record certificates from manufacturers and testing bodies stating that the equipment was designed for off-road industrial use and did not require road-worthiness certification.
The Gujarat High Court had previously upheld the tax demand, deeming the machinery “motor vehicles” liable to tax. UltraTech thereafter appealed to the Supreme Court.
Legal Issue
The central legal question was whether heavy construction and mining equipment used solely within enclosed premises qualifies as a “motor vehicle” under Section 2(28) of the Motor Vehicles Act, and consequently whether such machinery can be subjected to road tax under State motor vehicle taxation statutes.
Supreme Court’s Ruling
The Supreme Court allowed UltraTech Cement’s appeal, setting aside the Gujarat High Court order and quashing the tax demand. The Bench concluded that machinery used exclusively within factory or industrial premises:
- is a special type of off-road equipment;
- is not “adapted for use upon roads” within the statutory meaning under Section 2(28);
- and therefore falls outside the definition of “motor vehicle” for the purposes of road tax liability.
The Court observed that Entry 57 of List II of the Seventh Schedule of the Constitution empowers States to tax vehicles suitable for use on public roads. Since the equipment in question is designed for off-road industrial operations, it is not subject to such taxation under either the Motor Vehicles Act or the Gujarat Motor Vehicles Tax Act.
However, the Bench clarified that the exemption applies only where the machinery is used exclusively within enclosed premises and not on public roads. Should such vehicles be found operating on public roads, they would attract the Motor Vehicles Act’s provisions, including registration, road tax and applicable penalties.
Court’s Reasoning (Brief)
In its reasoning, the Court placed emphasis on the statutory definition of “motor vehicle” in Section 2(28) of the Motor Vehicles Act, which includes an express exclusion for vehicles of a special type adapted for use only in factories or other enclosed premises.
The Bench noted that the disputed machinery, while mechanically propelled, is not adapted for use upon public roads and thus falls squarely within the exclusion. It also referred to a recent Supreme Court precedent holding that motor vehicle tax should not be imposed in the absence of public road use or benefit derived from public infrastructure.
The Court examined constitutional powers under the Seventh Schedule, observing that state taxation powers are limited to vehicles suitable for public road use and cannot be extended to off-road industrial equipment.
Practical Implications
- The judgment clarifies that industrial off-road machinery deployed solely within enclosed factory or mining premises is not liable for road tax, potentially relieving companies in sectors such as cement, mining, construction and ports from long-standing tax demands relating to such equipment.
- It reinforces a narrow interpretation of “motor vehicle” for taxation purposes, emphasizing the elemental link between road usage and tax liability.
- The ruling underscores that equipment found operating on public roads would still attract taxation, registration and penal consequences, preserving regulatory oversight where public infrastructure is utilised.
The judgment adds clarity on the scope of the Motor Vehicles Act and State taxation powers by confirming that heavy construction and mining machinery used exclusively within enclosed industrial premises are not “motor vehicles” for road tax purposes under Indian law.
