The Kerala High Court recently held that forklifts and cranes used exclusively inside a factory are considered 'motor vehicles' under Section 2(28) of the Motor Vehicles Act, 1988 (MV Act) as they are structurally capable of being driven on public roads [Natural Wood & Veneers Pvt Ltd v State of Kerala & anr]
Hence, they have to be registered under the Kerala Motor Vehicles Taxation Act, 1976 and taxes should be paid on them under Kerala Motor Vehicles Taxation Act, the Court ruled.
Justice Mohammed Nias CP clarified that the statutory test of whether a vehicle would fall under the MV act is it's road worthiness and not actual road use.
Thus, when any vehicle is capable of moving on a road, even if used only within factory premises, the same would be consider as 'motor vehicles' under the Act unless it is specially designed exclusively for using in enclosed premises.
"The legal principles consistently affirmed by the Apex Court and various High Courts further reinforce this position: roadworthiness and adaptability, and not the actual use on roads, is the determinative test for whether a machine falls within the definition of a motor vehicle; exclusive use inside factory premises, port areas or enclosed compounds does not take such machinery outside the definition if it is capable of being used on public roads; the words “adapted” and “only” in the exclusion clause to Section 2(28) are decisive, with the exclusion applying only to machines exclusively designed for use within enclosed premises, rendering actual exclusive use irrelevant; and any machinery reasonably suitable for use on public roads remains a motor vehicle notwithstanding the claim that it is intended or designed for off-road or factory use," the Court said.
The petitioner, Natural Wood & Veneers Pvt Ltd, having a 6 acre factory in Ernakulam, was using two forklifts and a crane for lifting and transporting timber within the enclosed factory premises. They were never used or taken out on public roads.
The Company stated that these vehicles would fall under Section 29 (lifting machines, chains, ropes and lifting tackles) of the Factories Act, 1948, as 'machinery' and were periodically inspected for safety.
Based on these contentions, the company sought to quash an order issued by the Sub-Regional Transport officer in May 2025, directing them to stop using the forklifts and the crane until they were registered and insured.
The State argued that the machines fitted with mobility systems were capable of being driven on public roads and had remained unregistered and uninsured since their purchase.
It relied on the definition of 'public place' under Section 2(34) of the Act and stated that a factory is accessible to workers and visitors and thus, the vehicles used in such space would fall squarely within the scope of the Act.
The State further stressed that registration of the vehicles was essential to ensure insurance coverage for the workers and others in the factory in the event of any accident.
The Court agreeed with the State's contentions.
It examined Section 2(28) of the MV Act and the 2020 amendment to Rule 2(cab) of the Central Motor Vehicles Rules, which defined Construction Equipment Vehicles (CEV) and included vehicles like forklifts and cranes.
It noted that CEV consisted of machinery meant for off-highway use, inside factories, yards, construction sites, etc., but could still move on public roads occasionally and because they are not meant for regular transport, they are termed as non-transport vehicles.
However, they would still be 'motor vehicles' since these machines have their own engine and can move form one place to another.
Hence, the Court held that registration under Section 39 of the MV Act was compulsory for all such machinery capable of being used on public roads and only those which are permanently confined to enclosed premises and lack any ability to travel on roads would be exempt.
On the question of payment of tax, the Court stated that once a machine fell within the MV Act, tax liability would automatically follow under Section 3 (levy of tax) of the Kerala Motor Vehicles Taxation Act.
In view of the above, the petition was dismissed.
The petitioner was represented by advocate V Krishna Menon EK Madhavan, P Vijayamma, J Surya and AB Beenu.
Special government pleader (Taxes) Mohammed Rafiq appeared for the state.
[Read Judgment]