Case BriefsHigh Courts

Kerala High Court: A.K. Jayasankaran Nambiar, J., while holding the detention of goods valid as per Section 129(1)(b) read with Section 129(3) of the GST Act, discussed the requisites of interstate transactions under the GST Act.

Brief Facts

Facts of the case are enumerated hereunder;

  1. That the petitioner, who is a purchaser of turmeric from an agriculturist in Karnataka, has approached against detention of a consignment in transit.
  2. That it is the case of the petitioner that, the consignment was being transported under cover of an invoice generated by the petitioner in his capacity as purchaser of the goods, which showed the goods as attracting tax on reverse charge basis, and an e-way bill which reflected that the consignment was, as such, exempted from tax.
  3. That the vehicle and the goods were detained, and notice in FORM GST MOV-7 was issued to the petitioner wherein the objection was essentially with regard to the non-registration of the person making the interstate supply, as also the fact that the purchase bill issued by the petitioner was not a valid document for the purposes of supporting an interstate taxable supply.
  4. That it is the aforementioned detention order that the petitioner has moved against, relying on provisions contended herein. 

Contentions

The petitioner contends that, while the consignor agriculturist is not required to take any registration in view of the express provisions of Section 23(1)(b) of the Act, he is also not required to take compulsory registration under Section 24, since the non-obstante clause in Section 24 does not apply to agriculturists mentioned under Section 23. It is his further case that while the e-way bill clearly indicated that the goods were exempted goods, being turmeric bulbs and turmeric, even if the respondents have a case that the goods have been wrongly classified, the same cannot be a reason for detaining the goods under Section 129.

The Government Pleader submitted that the goods on verification were found to not answer the description of exempted goods under HSN Code 910 (for which the consignment was allegedly booked). Further, the consignment was not accompanied by a delivery challan that is required to accompany any consignment of exempted goods sold by an unregistered person.

Observations

The Court observed, “… non-registration of the consignor, or the alleged misclassification of the goods under transportation, cannot be a ground for detention under Section 129 of the GST Act.”  However, “the consignor being an unregistered person, and the goods supplied by him to the petitioner being exempted goods, the transportation had to be covered not only by an e-way bill but also by a delivery challan, and since the transportation was not covered by a delivery challan, the respondents were justified in detaining the consignment.”

The Court deciding upon the liability of the petitioner under Section 129(1)(b) of the Act, said, “(…) the petitioner would have to pay the lesser of an amount equal to 5% of the value of the goods or Rs 25000. In the instant case, the value of the goods being approximately 1000000, the lesser amount would be Rs 25000 which amount the petitioner would necessarily have to pay to obtain a release of the goods and the vehicle.”

Decision

Disposing off the present petition, the Court directed the respondents to release the goods and the vehicle to the petitioner on payment of Rs 25000 by the petitioner, as required in terms of Section 129(1)(b) read with Section 129(3) of the GST Act.[Mohammed Shereef v. State of Kerala, WP (C) No. 23397 of 2020, decided on 02-11-2020]


Sakshi Shukla, Editorial Assistant has put this story together

Case BriefsHigh Courts

Kerala High Court: A.K. Jayasankaran Nambiar, J. allowed the writ petition and quashed the series of detention notices issued against the petitioner.

The petitioner challenged a series of notices of detention, whereby a consignment of goods transported at the instance of the petitioner was detained by the respondent on the allegation that there was a discrepancy in the e-way bill that accompanied the transportation of the goods. The Court on reviewing the series of notices inferred that the reason for the detention was that, while the consignment was supported by an invoice which contained the details of the goods transported as also the tax paid in respect of the goods, there was no mention of the tax amounts separately in the e-way bill that accompanied the goods. The Court further inferred that the respondents, therefore, detained the goods on the ground that there was no valid e-way bill supporting the transportation in question.

Meera Menon and Harisankar Menon, counsel on behalf of the petitioner argued that the transportation was covered both by a tax invoice, as also an e-way bill in FORM GST EWB-01, and when both the documents are perused together, it was amply clear that the transportation was covered by documents that clearly indicated the fact of payment of tax on the goods that were being transported. Thus, the detention under Section 129 was unfounded and baseless.

Dr Tushara James, counsel appearing on behalf of the respondent contended that as per Section 33 of the GST Act, there is an obligation on every person, who makes supply for consideration and who is liable to pay tax for such supply, to prominently indicate in all documents relating to assessment, tax invoice and other like documents, the amount of tax which shall form part of the price at which such supply is made. Referring to the provisions of Section 129, the respondent further contended that the goods in question were being transported under cover of documents that had been raised in contravention of the provisions of Section 33. It was further argued that, the e-way bill being a document akin to a tax invoice, in relation to an assessment to tax, and not having carried the details regarding the tax amount, the transportation itself had to be viewed as in contravention of the Act and Rules for the purposes of Section 129.

As per the statutory provisions applicable to the instant case, a person transporting goods is obliged to carry only the documents enumerated in Rule 138(A) of GST Rules, during the course of transportation. The said documents are

  • the invoice or bill of supply or delivery challan, as the case may be and
  • the copy of e-way bill in physical form or e-way bill number in electronic form etc.

The Court pointed out that if a prescribed form under the GST Act does not contain a field for entering the details of the tax payable in the e-way bill, then the non-mentioning of the tax amount cannot be seen as an act in contravention of the GST Rules.

Nevertheless, the Court held that the e-way bill has to be in FORM GST EWB-01, and in that format, there is no field wherein the transporter is required to indicate the tax amount payable in respect of the goods transported and that the transpiration was covered by a valid tax invoice, which clearly showed the tax collected in respect of the goods and an e-way bill in the prescribed format.[M.S Steel and Pipes v. Asst. State Tax Officer, 2020 SCC OnLine Ker 3214, decided on 12-08-2020]

Business NewsNews

As per the decision of GST Council, the E-way bill system for Inter-State movement of goods had been rolled-out from 01-04-2018. As on 20-04-2018, the E-way bill system for Intra-State movement of goods has been rolled-out in the States of Andhra Pradesh, Bihar, Gujarat, Haryana, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Telangana, Tripura, Uttarakhand and Uttar Pradesh.

Furthermore, it has also been rolled out in Arunachal Pradesh, Madhya Pradesh, Meghalaya, Sikkim and Puducherry, effective from 25-04-2018.

With the roll-out of E-way bill system in these States/Union Territory, it is expected that trade and industry will be further facilitated insofar as the transport of goods is concerned, thereby eventually paving the way for a nation-wide single E-way bill system. Trade and industry and transporters located in these States/Union Territory have to obtain registration/enrollment on E-way bill portal namely https://www.ewaybillgst.gov.in.

[Press Release no. 1529960]

Ministry of Finance

Business NewsNews

As per decision of the GST Council, E-Way Bill system became mandatory from 01-04-2018 for all inter-State movement of goods. Both the businesses as well as the transporters moving goods worth Rs 50,000 from one state to another will have to carry an electronic or E-way bill from 01-04-2018, except for Karnataka having notified the E-way bill for both inter-state as well as the intra-state movement of goods. The E-way bill is being touted as an anti-evasion measure that would help boost tax collections by clamping down on the trade that currently happens on the cash basis. It was first introduced on 01-02-2018 but the implementation was put on hold after the system developed glitches in generating permits. With several states also starting to generate intra-state E-way bills on the portal, the system developed a snag. The Karnataka state government officials, however, said that the state has been running the E-way bill system for both inter-state and intra-state movement of goods since September, 2017.

To ensure a fool proof system, the GSTN has activated only that facility on its portal where E-way bill can be generated when goods are transported from one state to another by either road, railways, airways or vessels, and has further stated that it will block any attempt to generate E-way bill for intra-state movement of goods. The GST Council, has decided on a staggered rollout of the E-way bill starting with inter-state from 01-04-2018 and intra-state from 15-04-2018.

Furthermore, in addition to the above exceptions (i.e. only inter-State E-way bills are permitted for now, with Karnataka being the only exception to generate both inter- and intra-State E-way bills), the Central Government has, vide G.S.R. 315 (E), dt. 31-03-2018, on recommendations of the Council, notified that irrespective of the value of the consignment, no E-way bill shall be required to be generated where the movement of goods commences and terminates within the Union Territory of Andaman and Nicobar Islands.

The implementation of the nationwide E-Way Bill mechanism under GST regime is being done by GSTN in association with the National Informatics Centre (NIC) and is being run on portal namely https://ewaybillgst.gov.in. To answer queries of taxpayers and transporters, the Central helpdesk of GST has made special arrangements with 100 agents exclusively dedicated to answer queries related to E-way bills. Separately, state tax authorities have started helpdesk in local language, details of which are available on the GST portal. Central as well as State Tax Authorities have declared Nodal Officers for E-way bills. Detailed FAQs are kept on the portal for the guidance of the users.

E-way Bill can be generated through various modes like Web (Online), Android App, SMS, using Bulk Upload Tool and API based site to site integration etc. Consolidated e-way Bill can be generated by transporters for vehicle carrying multiple consignments. Transporters can create multiple Sub-Users and allocate roles to them. This way large transporters can declare their various offices as sub-users. There is a provision for cancellation of e-way Bill within 24 hours by the person who has generated the e-way Bill. The recipient can also reject the E-way Bill within validity period of E-way bill or 72 hours of generation of the E-way bill by the consignor whichever is earlier.

[Press Release no. 1527153, dt. 01-04-2018]

Ministry of Finance

Business NewsNews

The government has clarified the E-way bill regarding movement of goods from dry-ports to sea ports and from SEZs within the zone. It is in the backdrop of various representations from Association of Exporters as well as Corporate Bodies seeking clarity on the E-way bill.

Some of the queries regarding the applicability of the E-way bill are —

  1. Exemption for export consignments during custom bonded movement from one airport o another;
  2. Movement from SEZ/FTWZ (Free Trade Warehousing Zone) to port and vice versa;
  3. Parity in movement of export cargo with import cargo.

To clarify this issue the Central Goods and Services tax Rules, 2017 (CGST Rules) have been amended vide notification No. 12/2018-Central Tax dated 07-03-2018. As per sub-clauses (c) and (h) of sub-rule (14) of Rule 138 of the CGST Rules, no E-way bill is required to be generated where the goods are being transported:

  1. from the customs port, airport, air cargo complex and land customs station to an inland container depot or a container freight station for clearance by Customs;
  2. under customs bond from an inland container depot or a container freight station to a customs port, airport, air cargo complex and land customs station, or from one customs station or customs port to another customs station or customs port;
  3. under customs supervision or under customs seal.

[Press Release no. 1525915, dt. 22-03-2018]
Ministry of Finance

Business NewsHot Off The PressNews

In the 26th meeting held on March 10, 2018, the GST Council has recommended the introduction of e-way bill for inter-State movement of goods across the country from 01st April 2018. For intra-State movement of goods, e-way bill system will be introduced w.e.f. a date to be announced in a phased manner but not later than 01stJune, 2018.

Major improvements over the last set of rules, as approved by the Council now, are as follows:

  • E-way bill is required to be generated only where the value of the consignment exceeds Rs. 50000/-. For smaller value consignments, no e-way bill is required.
  • The provisions of sub-rule (7) of Rule 138 will be notified from a later date. Therefore, at present there is no requirement to generate e-way bill where an individual consignment value is less than Rs. 50,000/-, even if the transporter is carrying goods of more than Rs. 50,000/- in a single conveyance.
  • Value of exempted goods has been excluded from value of the consignment, for the purpose of e-way bill generation.
  • Public conveyance has also been included as a mode of transport and the responsibility of generating e-way bill in case of movement of goods by public transport would be that of the consignor or consignee.
  • Railways has been exempted from generation and carrying of e-way bill with the condition that without the production of e-way bill, railways will not deliver the goods to the recipient. But railways are required to carry invoice or delivery challan etc.
  • Time period for the recipient to communicate his acceptance or rejection of the consignment would be the validity period of the concerned e-way bill or 72 hours,whichever is earlier.
  • In case of movement of goods on account of job-work, the registered job worker can also generate e-way bill.
  • Consignor can authorize the transporter, courier agency and e-commerce operator to fill PART-A of e-way bill on his behalf.
  • Movement of goods from the place of consignor to the place of transporter up to a distance of 50 Km [increased from 10 km] does not require filling of PART-B of e-way bill.They have to generate PART-A of e-way bill.
  • Extra validity period has been provided for Over Dimensional Cargo (ODC).
  • If the goods cannot be transported within the validity period of the e-way bill, the transporter may extend the validity period in case of transhipment or in case of circumstances of an exceptional nature.
  • Validity of one day will expire at midnight of the day immediately following the date of generation of e-way bill.
  • Once verified by any tax officer, the same conveyance will not be subject to a second check in any State or Union territory, unless and until, specific information for the same is received.
  • In case of movement of goods by railways, airways and waterways, the e-way bill can be generated even after commencement of movement of goods.
  • Movement of goods on account of Bill-To-Ship-To supply will be handled through the capturing of place of despatch in PART-A of e-way bill.

Ministry of Finance

Business NewsNews

After some trial runs, the crucial anti-evasion measure under the goods and services tax (GST), e-way bill, is now mandatory for transporters across the country w.e.f. 01-02-2018. According to a steady-state estimate, 7-8 lakh such bills will be generated daily. Under the e-way bill system, every inter-state movement of goods with a value of over Rs 50,000 and being moved beyond 10 km, the transporter will have to generate an electronic bill on the designated portal. The bill will have the details of consignment, supplier and recipient, which is expected to help the tax department in verifying self-assessed tax returns filed by taxpayers. During the trial period that began from January 16, almost all states had come on board and the system generated 28.4 lakh bills 30-01-2018.

GST Network, the IT backbone for GST, saw 3.4 lakh e-way bills being generated on 30-01-2018. Additionally, during the trial run, 11,581 transporters registered for e-way bill system. These are those transporters who are not registered under GST. Under the GST regime, businesses which have a turnover of up to Rs 20 lakh per annum need not register under GST.

The e-way bill can be generated through various modes like web (online), Android app, SMS and excel-based bulk tool among others. Consolidated e-way bill can be generated for vehicle carrying multiple consignments. The transporters can manage sub-users and allocate roles to them, GSTN said in a statement. This way large transporters can declare their various offices as sub-users.

Further, there is provision for cancellation of e-way bill within 24 hours. The validity of these bills is fixed as one day for every 100 km or part thereof. E-way bill is a unified and simple system which establishes direct linkage between what is declared and what is actually moved. It will bring greater transparency and enable hassle-free movement of goods.

[Source: The Financial Express]