The purple-coloured vehicle was one of 30 floats in the carnival procession in the Lower Austrian municipality of Maissau and was covered with slogans described as racist.
These included a sign saying 'Shariah Police' as well as a spoof 'Red Bull Gives You Wings' slogan - which had been adapted to 'Islam Gives You Wings'. The number plate had 'Asylum 88' on it - the number 88 is often used as a code by neo-Nazis for 'Heil Hitler'.
Inside was a figure of the Austrian Chancellor Werner Faymann.
Local mayor Josef Klepp said more guidelines should be given about what was acceptable in the carnival in order to make sure that people did not fall foul of the law.
Traditionally though, carnival time is the opportunity to let out the fools, and a lack of political correctness can be a trademark of carnival humour.
On Monday, German police confirmed they were investigating local Fasching revellers for inciting racial hatred after creating an "Asylum Defence Force" tank as a carnival float.
The tank was one of those parading in the Steinkirchen district of Pfaffenhofen an der Ilm, a municipality in Upper Bavaria.
There was a crowd of around 500 watching the small procession which included the tank with the messages "Ilmtaler asylum defence force" and "Asylpaket III", a reference to the recently signed Asylpaket II (Asylum Package II) which is taking a tougher line on asylum seekers than the original open-borders approach.
The actor Florian Simbeck, who is also a local SPD (Social Democratic Party of Germany) politician, posted the pictures on his Facebook account, instantly attracting criticism for the carnival organisers.
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The organisers meanwhile said there were no right-wing extremist tendencies among their membership, and that refugees were welcomed in the procession. However, they declined to make any further comment on the tank.
Police confirmed that they were aware of the controversial nature of the tank, but decided that artistic freedom meant that it was acceptable. However, they took pictures and confirmed that the prosecutors had been informed.
Story courtesy of Central European News.