Tax exemption conditions upheld for electric vehicles purchased within Uttar Pradesh under the enabling taxation statute.

The Allahabad HC held that, where Section 3 of the U.P. Motor Vehicle Taxation Act, 1997 authorises exemption from motor vehicle tax subject to such conditions as may be specified, the State may lawfully attach purchase-based conditions to the exemption notification. The Court found that restricting 100% road tax refund to electric vehicles purchased and registered within Uttar Pradesh was not ultra vires the Act, because the statute does not limit the State's power to prescribe conditions for exemption. The challenge failed, and the writ petition was rejected.

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Issues: Whether the condition in the exemption notification restricting refund of road tax to electric vehicles purchased within Uttar Pradesh was ultra vires Section 3 of the U.P. Motor Vehicle Taxation Act, 1997 and liable to be quashed.

Analysis: Section 3 empowers the State Government to exempt any motor vehicle or class of motor vehicles from tax, wholly or partly, subject to such conditions and for such period as may be specified. The provision does not curtail the State's authority to prescribe conditions for grant of exemption. The notification granting 100% exemption only to vehicles purchased and registered in Uttar Pradesh was, therefore, within the statutory power. The distinction based on place of purchase was held to be a permissible condition, especially as the State receives GST revenue on in-State purchases and does not receive that benefit when the vehicle is purchased outside the State.

Conclusion: The condition attached to the exemption notification was upheld and the challenge to it failed.

Final Conclusion: The writ petition was rejected, and the State's power to grant tax exemption with purchase-based conditions was affirmed.

Ratio Decidendi: Where the enabling statute authorises exemption from tax subject to such conditions as may be specified, the State may lawfully restrict the benefit of exemption by a condition based on the place of purchase if the condition is not contrary to the statutory scheme.

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