Bates, 22, from Canberra and co-driver John McCarthy in the Toyota Genuine Parts Corolla were part of a three-way duel over two days and 18 competitive stages totalling 220km around Ballarat.
Bates won the first day by 14.8 seconds, with just 7.9 seconds covering the top three competitors over the two-day event.
Nathan Quinn was second in a Mitsubishi and Eli Evans third in a Peugeot.
Bates' win, with six stage victories, came on the birthday of his father and crew chief, four-times national rally champion Neal Bates.
"It was a full-on contest between the three of us from the first stage, with the overall lead swapping around stage by stage," Harry Bates said.
"The roads were very dusty and the battle was intense with the result in the balance until the very end, which makes it even more rewarding to come out on top and record the win.
"My co-driver John McCarthy and the whole team did a great job; and the win was even better since Sunday was Dad's birthday as well."
Family celebrations were tempered by desperately bad luck for Harry Bates' younger brother Lewis, whose Corolla was destroyed.
"Lewis went off the road at a crest and the car became stuck in soft sand," Harry Bates said. "Then it caught fire and burned to the ground. We're all devastated for him."
The next event on the Australian Rally Championship calendar is the Make Smoking History Forest Rally in Western Australia from April 21 to 23.
Photo Credit: Jack Martin Photography