Supreme Court Ruling Brings Relief to Industries on Off-Road Equipment Taxation

India’s industrial and infrastructure sectors have received significant regulatory clarity after the Supreme Court of India ruled that specialised off-road construction equipment cannot automatically be treated as motor vehicles liable to road tax. The judgment ends decades of uncertainty for companies operating heavy machinery within factory premises, mines and industrial zones.

The ruling was delivered by a bench of Justices Pankaj Mithal and Prasanna B. Varale while hearing a plea filed by UltraTech Cement. The company had challenged a 2011 Gujarat High Court order that allowed state authorities to levy motor vehicle tax on construction equipment based on its potential, rather than actual, road use.

Setting aside the high court’s decision, the apex court clarified that road tax can only be imposed on vehicles that are suitable for and intended to be used on public roads. The court relied on Entry 57 of List II of the Seventh Schedule of the Constitution, which empowers states to tax vehicles meant for road use. Equipment designed primarily for off-road operations does not fall under this category.

The judgment is expected to benefit sectors such as cement, mining, infrastructure, ports and dredging, where heavy equipment like dumpers, excavators, cranes, loaders and road rollers are predominantly deployed within confined industrial areas. The court observed that such machinery is of a special type and is meant for use and operation within industrial premises, not for regular movement on public roads.

Importantly, the court also noted that even under the Gujarat Motor Vehicles Tax Act, there is no specific provision to levy road tax on construction equipment vehicles. However, the bench added a clear caveat. If such machinery is found to be using public roads, even occasionally, it would attract the provisions of the Motor Vehicles Act along with applicable state tax laws and penalties.

The dispute traces back nearly 25 years, when transport authorities in Gujarat began demanding road tax on heavy construction equipment, arguing that the decisive factor was whether the machinery was capable of road movement. Several companies contested this interpretation, pointing out that such equipment is oversized, slow-moving and often transported dismantled on trailers.

With this ruling, the Supreme Court has restored a clear distinction between road-going vehicles and specialised off-road industrial equipment. The decision is expected to bring regulatory certainty, reduce litigation and ease compliance burdens for industries operating within factory and industrial zones across India.