M/s. KUN MOTOR CO. PVT. LTD., VISHNU MOHAN Versus THE ASST. STATE TAX OFFICER, STATE OF KERALA
GST
2018 (11) TMI 1344 – KERALA HIGH COURT – [2019] 60 G S.T.R. 132 (Ker), 2018 (19) G. S. T. L. 395 (Ker.)
KERALA HIGH COURT – HC
Dated:- 10-9-2018
WP(C). No. 29019 of 2018
GST
Mr. Justice Dama Seshadri Naidu J.
For the Petitioner : Harisankar V. Menon, Smt. Meera V. Menon And Smt. Meera V. Menon
For the Respondent : Dr Thushara James GP
JUDGMENT
Introduction:
A person from Trivandrum goes to Pondicherry, purchases a car, and entrusts it to the car dealer to transport it to Trivandrum. On the way, in Kerala, the officials under the GST Act, intercept the vehicle and detain the goods, for no e-way bill accompanies the consignment. After responding to the statutory notice and after suffering a penalty order under section 129 of the GST Act, both the dealer and the purchaser file this writ petition.
2. Should the transport at the behest of an individual, an unregiste
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sport charges, paid the IGST, and then dispatched the vehicle through its lorry to Trivandrum.
4. But en route, on 28 August 2018, the Assistant State Tax Officer, the first Respondent, intercepted the vehicle at Amaravila and detained it, invoking Section 129 of the KSGST Act. When the officer detained the consignment, he took a statement from the lorry driver and also passed a formal order of detention, besides issuing a notice under Section 129 (3) of the Act. Exts.P4, P4 (a) and P4 (b) are the statement of the driver, the detention order, and the statutory notice respectively.
5. Through the Ext.P4(b) notice, the State Tax Officer demanded tax and penalty of Rs. 33,59,056/-. The next day, that is on 29 August 2018, the Company and Mohan replied to the statutory notice. On the subsequent day, once again, the Company sent another reply. These are the Exhibits P5, P5 (a), and P5 (B). In turn, the Tax Officer on 1st September 2018 informed the Company and Mohan, through Exhibit P6, t
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on contends that Mohan, as an individual, and without ever trading in cars, was found transporting the vehicle, so the entire GST regime remains inapplicable to him. He also stresses on, what he calls, Mohan's honesty in getting the vehicle transported to Trivandrum, rather than have it permanently registered at Pondicherry, by paying less tax. On the Company's paying the IGST on the car sale, Sri Menon, once again, asserts that it was a generous gesture so Kerala, too, gets a share in the tax 'pie'.
9. Sri Menon, then, took me on a tour of semantic exploration; he tried to explain the significance of “used personal and household effects”. In the end, and as an alternative plea, Sri Menon has urged the Court to take a lenient view of the transaction because of Mohan's bona fides. He wants the Court to let Mohan have the car released by his providing a personal bond, rather than bank guarantee.
Respondents':
10. Dr. Thushara James, the learned Government Pleader, has strongly cou
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ansaction until it delivered the car to the purchaser at the agreed destination.
12. In the end, Dr. James has submitted that if the Court accepts, what she calls, the spin the petitioners put on the concept of “used cars”, every piece of movable property becomes a used item the moment it is purchased. In this regard, she has referred to certain provisions in the Motor Vehicles Act, too, besides the Value Added Tax Act. Relying heavily on some precedents of this Court, Dr. James has urged the Court to dismiss the writ petition.
Discussion:
13. Let us first see out the grounds of detention. Exhibit P4, the notice issued under Section 129 (3) of the Act, contains these allegations: (1) the consignment is an interstate supply of more than Rs. 50,000/- value, so e-way bill is mandatory; (2) the temporary registration at Pondicherry is suspicious; (3) compensation cess is seen collected at 20% instead of 25%. The last two grounds the petitioners strongly refute.
According to them, the s
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l to one hundred percent of the tax payable on the goods. If the goods belong to an exempted category, a different rate applies, though.
15. If a person other than the owner-for example, a transporter-comes forward, it will have the goods released (b) on its paying the tax and penalty equal to the fifty percent of the goods value reduced by the tax amount paid. Of course, the exempted goods do carry a different rate. Clause (c) of Section 129 permits the consignor or the other party to furnish a security equivalent to the amount payable under clause (a) or clause (b) “in such form and manner as may be prescribed.” The proviso to Section 129 ensures the principles of natural justice: there will be no detention or seizure without the officer's serving an order on the person transporting the goods.
16. And after considering the aggrieved person's objections under subsection (4), the officer passes another order, under subsection (3), specifying the tax and penalty payable under clauses
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ignor or the consignee transports the goods, either in its own conveyance or a hired one, it may generate an e-way bill in FORM GST INS-01, after furnishing information about the transporter and the vehicle in Part B of that Form. If it does not generate the e-way bill but hands over the goods to a transporter, the registered person must furnish the information to the transporter. Then, the transporter will generate Part B, based on that information. If the value of goods sought to be transported exceeds Rs. 50,000/-, every supplier, recipient, and the transporter must generate the e-way bill. For the value below Rs. 50,000/-, e-way bill is optional.
21. Under Rule 2 (1) of the Rules, the person in charge of a conveyance must carry- (a) the invoice or bill of supply or delivery challan; and (b) a copy of the eway bill or the e-way bill number, either physically or mapped to an RFID, [Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track
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ll on the same portal, based on the information the registered person has provided in Part A of FORM GST EWB-01.
24. The second proviso to subrule (3) mandates that if an unregistered person transports the goods either by his own conveyance or by a hired one, or transports through a transporter, he or the transporter may generate the e-way bill in FORM GST EWB-01 on the common portal. In the same breath, we will examine subrule (14), too. It enlists the occasions when “no e-way bill is required to be generated.”
Clause (a) of this sub-rule exempts the goods specified in Annexure from the requirement of e-way bill. And item 7 of the annexure reads thus: used personal and household effects. Indeed, the petitioners contend that what was transported is a car, and that car is a used personal item.
25. Now we may as well examine Rule 55A of the Rules. If the law compels no person in charge of the conveyance to carry an e-way bill, Rule 55A sets out what other documents that person should
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nces. It also noted that Rule 140 permits the authorities to release the seized goods on the person's executing “a bond for the value of goods in FORM GST INS-04 and furnishing security in the form of a Bank Guarantee, equivalent to the amount of applicable tax, interest, and penalty payable provisionally.” After referring to both Section 67 (6) of the Act and Rule 140 of the KSGST Rules, the Division Bench observes that there is an effective mechanism for provisional release of goods; so the Courts cannot compel the authorities to stray from that mechanism. Then, it reversed the impugned judgment.
28. In The Assistant State Tax Officer v. Indus Towers Limited [MANU/KE/1685/2018], the question is whether there could be detention and seizure under Section 129 of the Act, when there is, obviously, no tax liability on the goods. Goods seized, the officer found only a delivery challan with the goods, as provided under Rule 55 of the KSGST Rules.
But the consignment contained no declarati
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livery challan under section 55, it observes, is not one issued by the Department but is one “prepared by the assessee, who is only obliged to maintain it serially numbered. It does not lie in the detaining officer's mouth to suspect the genuineness of the delivery challan when the consignor swears by it.” The Division Bench, in fact, observed that non-taxable nature of the transaction would be justified under the Rules only if the party declares according to Section 138. It held:
“[o]nly when there is a declaration uploaded in Form KER-1the transaction, which is non-taxable, would be intimated to the Department and available in its site. If not, there could definitely be a sale effected without an invoice; if the delivery challan goes undetected, resulting in evasion of tax.”
30. On facts, the Division Bench has held that the transaction, as projected, is non-taxable. Yet the statutory rules prescribe certain documents to accompany the goods, even with a non-taxable transport.
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er notice shall be issued and the adjudication under sub-section (3) completed; upon which if penalty is imposed, definitely the respondents would have to satisfy the same.
31. Indeed, the transaction here is plain and simple. The Company, at Pondicherry, deals in motor cars. Mohan purchased a car. Ext.P1 is the tax invoice, seen with 28% IGST. That transaction was completed, as Mohan had the vehicle temporarily registered at Pondicherry itself. Ext.P2 is the Temporary Certificate of Registration. That was ostensibly to facilitate the task of transporting the car. Mohan had two options: one to drive down the vehicle all the way to Trivandrum; the other, to get it transported safely. He chose the latter. He, then, entrusted the car to the Company for its transportation to Trivandrum. The Company undertook the task. It paid IGST @18% because it is an interstate transport. Ext.P3 is the invoice. 32. Ext.P3, the pivotal document, shows the Company as the Dealer; it undertakes to “supply”
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r transported. He can transport the car “either by his own conveyance or by a hired one”. He may transport it through a transporter. That he did. In that event, he or the transporter may generate the e-way bill in FORM GST EWB-01 on the common portal. But the question is, does the Ext.P3 invoice, coupled with the Ext.P1 Tax Invoice, leads us to conclude that the purchase of the car was, in the first place, a completed intra-state sale and that only the transport was an inter-state event? Venturing into that adjudication is premature, for both the Company and Mohan have the issue pending before the authorities concerned. They have an effective remedial measure of appeal, too. Any observation, at that stage, may prejudice their cause or may render the administrative adjudicatory mechanism otiose. All that the petitioners wanted is an interim release of the goods, pending further adjudication. Suffice if I confine myself to that.
35. Granted, Mohan could have driven the vehicle to the de
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estination-at the instance of an unregistered person. Then, we need to examine whether the second proviso to subrule (3) of Rule 138 applies.
37. By undertaking that exercise, I cannot stymie the statutory mechanism provided for adjudicating the detained goods. So it is, for me, premature to venture into that hypothetical field. Besides that, the petitioners also bring in the concept of “used personal and household effects.” I must appreciate Sri Menon on his thorough exposition of the semantic nuances of the term “used.” He cited from dictionaries and decisions, too. But, regrettably, I cannot rule on that aspect. Let the authorities decide on it, besides their deciding whether the petitioners could take advantage of Rule 55A of the Rules, as well.
38. Now the question is, does the statutory mandate under section 129 of the GST Act admit of any discretion to let the affected party pay a reduced amount of tax and penalty pending further adjudication, for having the interim custody of
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