STATE OF RAJASTHAN vs HERITAGE CRAFTS

The Supreme Court ruled that the second proviso to Section 4(1)(b) of the Rajasthan Motor Vehicles Taxation Act, 1951, imposing an additional one-time tax on the transfer of vehicle ownership, is beyond the legislative competence of the State as it falls outside Entry 57 of List II of Schedule VII of the Constitution of India. The Court held that the levy is arbitrary and lacks a nexus with the intended objective of discouraging vehicle transfers, as the original owner had already paid the tax. Consequently, the Court upheld the High Court's decision to strike down the impugned proviso.