Mumbai: Any vehicle which uses a source of energy cannot be called a ‘bicycle', the Bombay High Court has held in a sales tax dispute.

A Division bench of Justices V. C. Daga and K. K. Tated held that for the purpose of taxation, what is popularly known as “e-bike” -- a battery-powered bicycle -- cannot be taxed at the same rate as an ordinary bicycle.

Thane-based K. K. Rim Pvt. Ltd. had filed an application before the Sales Tax Commissioner in 2007, contending that the bicycle produced by it, namely “Model Matrix” (also called “E-Bike Matrix”), should be taxed at the rate of 4 per cent, like ordinary bicycles.

Model Matrix comes fitted with a battery, which can be used along with manual pedalling to run it. However, it had submitted a certificate given by the Automotive Research Association of India, to the effect that it was not a motor-vehicle. However, both the Sales Tax Commissioner and the Appellate Tribunal said that this product could not be deemed to be a bicycle but would be taxed at the same rate as an electrical battery, i.e. 12 per cent.

The company filed another appeal in the High Court. The High Court upheld the argument of Sale Tax authorities saying that “if a vehicle runs with the help of any energy then the same cannot be termed a “bicycle”.