Rajasthan HC: Out-of-State Road Tax Illegal

A Division Bench of the Rajasthan High Court at Jaipur, Chief Justice Sanjay K. Agrawal and Justice Sameer Jain, has held that the state's Transport Department had no authority to collect one-time road tax from private cars registered in other states whose owners had already paid lifetime tax at home. The lead case is reported as Harpy Core Network India Private Limited v State of Rajasthan and Others, decided with a batch of connected petitions and reported on 3 November 2026. The court set aside the demand orders and challans, directed that seized vehicles be released at once and ordered the tax collected from the petitioners refunded within 30 days. It is a clear win for the people who went to court. For everyone else who drives, buys or sells a car on another state's plate, it is a reason to read the paperwork more carefully, not less.

What the Court Decided

The dispute began with a familiar roadside scene. Private cars on Haryana, Delhi, Punjab, Gujarat, Uttar Pradesh and Madhya Pradesh plates were stopped in Rajasthan, told they had been in the state for more than 30 days, and either challaned or impounded until a one-time tax was paid. The department's position, as reported by IANS and the legal reporter LawChakra, rested on Rule 28 of the Rajasthan Motor Vehicles Taxation Rules: a private vehicle registered outside Rajasthan is exempt for up to 30 days, and after that it becomes liable to tax under the Rajasthan Motor Vehicles Taxation Act, 1951. The petitioners answered with Article 265 of the Constitution, which says no tax shall be levied or collected except by authority of law, and asked a simple question: which notification fixes the rate for a private non-transport car registered in another state?

The state could not produce one. It pointed instead to the general one-time tax provision for non-transport vehicles registered in Rajasthan, and to a notification of 10 July 2024 that set one-time tax rates and mentioned other-state vehicles in passing. The bench held that the two clauses of the charging section cover different fields, that the general provision for Rajasthan-registered vehicles cannot be stretched to vehicles registered elsewhere, and that a notification under a different provision which merely refers to other-state vehicles does not satisfy the requirement of a rate notification for them. On Rule 28 the court was direct: a rule can say when a temporary exemption ends, but it cannot by itself create a tax liability without a charging provision and a notified rate behind it. Staying beyond 30 days, in other words, does not cure the missing notification.

Two things the judgment does not do deserve as much attention as what it does. It does not hold that a car on another state's plate is exempt from every lawful Rajasthan levy; the court expressly recognised the state's power to tax within statutory and constitutional limits. And it binds the state only in respect of the petitioners' vehicles and demands. Others who paid the same tax will have to make their own applications, and may find the department waits for an appeal or issues the missing notification before it refunds anyone. One Hindi report put the batch at around 90 petitions and described the collections as a year-end revenue push by the Jaipur RTOs; we have not been able to confirm either from a second source, so treat both as reported rather than established.

The Law That Did Not Change: Section 47, Section 48 and the State Tax Rules

The judgment turns on a missing notification, not on the framework that governs cars moving between states. That framework stands exactly as it did last week, and it is the part a used car buyer must understand.

Section 47: twelve months, then a new registration mark

Section 47 of the Motor Vehicles Act 1988 says that when a vehicle registered in one state has been kept in another state for more than twelve months, the owner must apply to the registering authority of the new state for a new registration mark. The application goes in Form 27 of the Central Motor Vehicles Rules 1989 and must carry the No Objection Certificate from the original registering authority. If the vehicle is under hire-purchase, lease or hypothecation, the financier's NOC is required as well. The twelve-month figure is the national limit; it is the one Maharashtra RTOs were enforcing in October, which we covered in our piece on the Maharashtra out-of-state car checks. Our tip on re-registering a car or bike in another state walks through the forms, fees and timelines step by step.

Section 48: the NOC and the thirty-day deemed grant

Section 48 requires the owner to obtain a certificate from the original registering authority stating that it has no objection to the new registration mark or to a transfer of ownership in another state. The application is Form 28. The authority must obtain a police report confirming that no theft case is reported or pending against the vehicle, must record reasons for any refusal, and if it neither grants nor refuses within thirty days the certificate is deemed granted. A NOC is a one-way door: once it is issued, the old RTO treats the vehicle as leaving, and a transfer of ownership in the old state generally cannot proceed until the NOC is used or cancelled. That matters to a buyer because a seller who applied for a NOC two years ago and never completed the move has left the record in a state that blocks both routes. Our guide to Forms 28, 29 and 30 explains which form does what.

State tax rules: the 30-day clock is common, the rate is not

Most states have a rule like Rajasthan's Rule 28. A private vehicle registered elsewhere may be used or kept in the state for a short grace period, 30 days in Rajasthan, after which the owner is expected to intimate the taxation officer and pay the state's tax. Maharashtra, Karnataka and others have their own versions and their own grace periods. What the Rajasthan judgment shows is that the clock and the charge are two different things: the clock can run, but the charge needs a notified rate behind it. Whether your state's rate notification covers an other-state private car is a question for a lawyer, not for the roadside. For a buyer the practical point is simpler. If the car has been in your state for longer than the grace period and well past twelve months, somebody has been avoiding both the state tax and the re-registration, and after the sale that somebody is you.

The BH-series alternative

A Bharat series mark avoids the whole exercise for owners who qualify. Tax is paid in two-year blocks, or multiples of two years, rather than as a lifetime sum to one state, and the vehicle needs no re-registration when the owner moves. Eligibility is limited: defence personnel, central and state government employees, public sector employees, and private-sector employees whose employer has offices in at least four states or union territories, who must submit Form 60 from the employer. Autocar India's guide of 31 October 2026 confirms the two-year tax block and the four-state condition. A used BH car keeps its mark only if the buyer is also eligible; otherwise it must be assigned a regular state registration and taxed under that state's rules. Our tip on whether a BH registration can be transferred covers the second-hand case.

Reading an Out-of-State Car in the VAHAN Record

Type the registration number from the plate into the Vahan Verify page. The Rs. 99 RC check reads the official record and returns the fields below. On a car that carries another state's plate, four of them do most of the work.

The tax-paid-upto field is the one this judgment makes topical. A car that paid lifetime tax in Haryana and has lived in Jaipur for three years shows a Haryana RTO, a far-future tax date and, if the owner never applied, no NOC. That record is exactly what the petitioners had, and it is lawful to have it on day 29. On day 400 it means that the car is overdue for re-registration under Section 47, that the owner has not paid any Rajasthan tax, and that the state, once it has a notification in place, can come looking for the car. If you buy it, you inherit the application, the NOC and the new state's tax, which on a mid-size car can run into Lakhs. Our explainer on how unpaid road tax rides with the car covers a Karnataka High Court view on who carries arrears after a sale; the two judgments are about different questions, but both point the same way for a buyer.

Tax Refund From the Home State After Re-Registration

When a car is re-registered in a new state and taxed there, most home states refund a share of the unused lifetime tax. The claim is made to the original registering RTO on the state's refund form, commonly Form 16, with the new RC, the new state's tax receipt, the NOC and the original tax receipt attached. The amount depends on how many years of the lifetime assessment are left; a car moved in year three has much more to reclaim than one moved in year twelve. Deadlines are short, often around six months from the new registration, and the forms and local requirements differ between states. We set out the general procedure, and why many owners find it slow and partial, in our guide to claiming a road-tax refund when moving states, and our tip on the Form 16 refund on state transfer covers the paperwork. Confirm the exact form, window and percentage with the home-state RTO before you count on the money.

The Rajasthan refund ordered this week is a different thing. It is the return of a tax the court found had no legal basis, ordered against the state that collected it, payable within 30 days of a petitioner producing the judgment. Nobody has to re-register anything to receive it. But it is available only to those who were before the court, and the state may appeal.

Checklist: Buying a Car With Another State's Plate

1. Run the Rs. 99 RC check before the test drive. Note the registering RTO and state, the tax-paid-upto date, the NOC field, the financier field, the status and the owner serial. Compare each with what the listing and the seller told you. Rs. 149 adds pending challans from the state where the car has actually been driven.
2. Establish how long the car has been in your state. Ask for the owner's rental agreement, employer transfer letter or Aadhaar address change date. If it is more than twelve months, Section 47 re-registration is overdue; if it is past the state's grace period for tax, the state tax question is live too. Price both in.
3. Decide who will do the re-registration, and put it in writing. The cleanest route is for the seller to obtain the NOC and complete the move, then sell you a car on your state's plate. The second-best route is for the seller to obtain the NOC in Form 28 and hand it to you with the sale, so you apply in Form 27 on arrival. The worst route is "you can sort the NOC later", because the NOC application needs the registered owner, who by then has your money and no reason to help.
4. If a NOC was issued earlier, find out what happened to it. The record shows the date and the destination RTO. An issued-but-unused NOC must be cancelled at the old RTO or completed at the new one before a transfer of ownership can go through. Ask for the NOC copy and the cancellation or re-registration receipt.
5. If a financier shows, get the loan closure letter and the financier's NOC. Section 47 needs it for a new registration mark; the RTO will not assign one without it. Our tip on hypothecation on a used car covers how to clear the entry.
6. Price the new state's tax yourself. Ask your RTO or check the state's rate schedule for a vehicle of this invoice value and age. On a car above Rs. 10 Lakh, re-registration tax can be a large share of the price you are being asked to pay; it is the seller's discount, not yours to absorb.
7. Insist on original documents. The original RC, the original tax receipt from the home state, the insurance policy, the PUC and, if the car is BH-series, the owner's eligibility proof. A seller of an other-state car who offers only a photocopy of the RC is a seller to leave.
8. Confirm the result. After re-registration, run the Rs. 99 check again on the new number to see your name, your state's RTO and the new tax-paid-upto date. If you are buying in Rajasthan, verified listings in Jaipur show the registration number up front so the check takes two minutes.

What This Means for Sellers of an Out-of-State Car

If you own one of the cars this judgment describes, you have a choice to make before you list it. Completing the re-registration yourself is slow and costs the new state's tax, but it gives you a car that any local buyer can transfer without a second thought, and it lets you claim the unused tax from your home state. Selling on the home plate is faster but shrinks your market to buyers who will take on the NOC, the Form 27 application and the tax, and every one of them will price that work into the offer. Selling the car back in the home state, if you still have an address there, is often the cleanest option of all: no NOC, no re-registration, no tax gap, and a buyer who sees a local plate.

Whichever route you take, say so in the listing. A verified listing on VahanBazaar costs Rs. 99, is cross-checked against the VAHAN record, and on average draws about 3x more buyer enquiries and sells around 40 per cent faster, based on VahanBazaar listings data. For an other-state car that matters more than usual, because the buyer's first question is always "why is it on a Haryana plate?" and a verified badge with a clean RC answers half of it before you pick up the phone. Buyers who read our guide to buying a used car from another state will ask the other half; have the NOC and the tax receipt ready.

This article is general information and not legal or financial advice. The judgment is described as reported by IANS, LawChakra and First India News on 3 November 2026; we have not seen the full text and the state may appeal. Section references are to the Motor Vehicles Act 1988 and the Central Motor Vehicles Rules 1989; state taxation rules, grace periods, refund forms and fees differ between states and change by notification. Confirm the position with your RTO before buying, selling or moving a vehicle across a state line.