Kerela High Court in its recent ruling in the case of VST and Sons (P) Ltd filed by Revenue has held that e –way bill is not necessary for transportation of personal effects and thus detention U/s. 129 of the CGST Act / SGST Act is unwarranted.
Facts of the Case:
- VST & Sons (P) Ltd (1st Respondent) and Muthukumar Meenakshy (2nd Respondent) had initially filed the writ petition challenging the detention of the ‘RANGE ROVER’ motor vehicle belonging to 2nd Respondent while being transported from Coimbatore to Thiruvananthapuram as ‘used personal effect’.
- The vehicle was detained on the allegation that the same was transported without the E-way bill as contemplated under Rule 138 of the Kerala GST Rules, 2017. By the impugned judgment, the learned Single Judge allowed the writ petition and quashed the notices issued U/s 129 of the CGST/Kerala SGST Acts.
- Pursuant to the impugned judgment in the WP[C], the vehicle had been released to 2nd Respondent.
- However, aggrieved by the judgment of the single bench, the State Tax Department has filed this writ appeal.
Order of Kerela High Court:
- The High Court observed that the only reason stated for detaining the goods was that it was transported without the e-way bill. It must be remembered that goods that are classifiable as used personal and household effect falls under Rule 138(14) (a) of the Kerala GST Rules, 2017 and are exempted from the requirement of e-way bill. The 2nd respondent had purchased the vehicle after payment of IGST. A temporary registration was also taken apart from the motor vehicle insurance. The vehicle was entrusted for transportation from Coimbatore to Thiruvananthapuram instead of driving the same across the State borders. The vehicle had in fact run 43 Kms but during transportation, the vehicle was detained for the reason of non-generation of e-way bill.
- The High Court noted that in the decision in KUN Motor Company’s case, the Division Bench of the Court had, in an almost identical situation, observed as follows :-
“We do not understand how the State could take a contention that if the car had been driven into the State of Kerala from the U.T. of Puthuchery; then there could not have been a detention under Section 129, since then there would have been no question of uploading of e-way bill. We cannot also comprehend how an intra-State sale would be converted to an inter-State sale merely for reasons of it being transported in carriage.
The incidence of tax is on the supply and not on the nature of transport. There is no distinction in so far as the I.G. & S.T. Act is concerned, of a supply by road or on a carriage. We hence are of the opinion that the supply of the new vehicle by its authorised dealer terminated on it being purchased by the 2nd appellant in Puthuchery and the subsequent movement of the goods was not occasioned by reason of the transaction of supply. The goods having come into the possession of the purchaser, and the vehicle having been used, however negligible the distance run, we are also of the opinion that it is his “used personal effect” and there can be alleged no taxable transaction in so far as the movement of goods from Puthuchery to Trivandrum in Kerala, especially since the car had been registered in the name of the purchaser”.
- The said decision held that used vehicles, even if it has run only negligible distances are to be categorized as ‘used personal effects’.
In view of above deliberations and agreeing with the decision in KUN Motor Company’s case and since the facts of the present case is almost similar to that case, the Kerala High Court found no merit in this appeal of Revenue and dismissed the same. In other words it confirmed the judgment of the single bench which had held that e –way bill is not necessary for transportation of personal effects and thus detention U/s. 129 of the CGST Act / SGST Act is unwarranted.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
