2017 Taxo.online 65
dated 11.12.2017
KAVERI ENTERPRISES
STATE OF ANDHRA PRADESH
2017
GST
Central Goods & Services Tax Act, 2017
CGST Rules
138
Justice C.V. Nagarjuna Reddy and Justice T. Amarnath Goud
In favour of assessee
High Court
Andra Pradesh
Seizure of Goods – Goods not accompanied by an e-way bill generated by the traders of their respective states receiving the goods – Challenge made to G.O. M’s dated 24.07.2017 and dated 03.10.2017 issued by the Government of Andhra Pradesh and Telangana respectively – Held: – Prima facie, the Court was of the opinion that when the Constitution has conferred exclusive legislative power on the Parliament in respect of supply of goods or of services or both in the course of inter-State trade or commerce, the State Governments are denuded of the jurisdiction to prescribe any Rules governing such transactions. Further, reliance on Rule 138 of the CGST Rules, which is in pari materia in the State Rules framed by both the States, is misplaced – State Legislature is competent to make laws only with reference to the intra-State movement of goods or services, Rule 138 has to be construed as being applicable to such goods and services – G.O.M’s under challenge, issued by the Governments are not enforceable insofar as made with reference to the inter-state movement of goods or services – Goods along with vehicle ordered to be released on executing a bond to that effect– Tax would be payable along with penalty.
Rspresented by:-
Order:-
For Petitioner : – C.V. Nagarjuna Reddy. J. (Common)].
The Learned Standing Counsel for Commercial Taxes appearing for the respondents-States take notice and seek time for filing counter affidavits.
2. The subject matter of these writ petitions pertains to the seizure of goods along with vehicles only on the ground that the goods were not accompanied by an e-way bill generated by the recipient trader of Andhra Pradesh State/Telangana State, as the case may be. In some of the writ petitions, validity of G.O. Ms. No. 309, dated 24-7-2017/G.O. Ms. No. 180, dated 9-8-2017, envisaging e-waybill of the States concerned in which the goods are received as one of the required documents to accompany the goods, is challenged.
3. The controversy arose in the backdrop of enactment of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as “IGST Act”), governing the inter-State movement of the goods. Article 246A inserted by the Constitution (One Hundred and First Amendment) Act, 2016, is a special provision with respect to goods and services tax. Clause (1) thereof empowers the Legislature of every State to make laws with respect to goods and services tax imposed by the Union or by such State. However, Clause (2) has conferred exclusive power on the Parliament to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. The Parliament has accordingly enacted the IGST Act in respect of supply of goods, or of services, or both taking place in the course of inter-State trade or commerce. It has also enacted Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the CGST Act”), governing levy of tax on intra-State supply of goods or services or both except supply of alcoholic liquor for human consumption and other exempted categories which are brought under the purview of the Goods and Services Tax Council. The respective State Governments also enacted State laws governing collection of State Goods and Services Tax. Under Section 20 of the IGST Act, the provisions of the CGST Act relating to various aspects, including tax invoice, credit and debit notes etc., shall mutatis mutandis apply to the central tax, as if they were enacted under the said Act.
4. Under Section 7 of the IGST Act “inter-State supply” means, the location of supplier and the place of supply are in (a) two different States; (ii) in two different Union Territories; or (iii) in a State and a Union Territory. The Government of India in exercise of its rule making power, framed the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “the CGST Rules”). Rule 138 thereof deals with information to be furnished prior to commencement of movement of goods and generation of e-waybill. This Rule inter alia provides that every registered person, who causes movement of goods of consignment value exceeding fifty thousand rupees, shall, before commencement of such movement, furnish information relating to the said goods in Part A of Form GST EWB-01, electronically, on the common portal. It is the common case that the date with effect from which Rule 138 of the CGST Rules shall come into force has not been notified so far and accordingly the said Rule has not in force.
5. In this situation, the Government of Andhra Pradesh issued G.O. Ms. No. 309, Revenue (CT-II) Department, dated 24-7-2017, as extended by G.O. Ms. No. 446, dated 3-10-2017, upto 31-12-2017, envisaging generation of Form – GST e-Waybill by the supplier or recipient registered in the State of Andhra Pradesh. A similar G.O. has been issued by the Government of Telangana, vide GO. Ms. No. 180, Revenue (Commercial Taxes-II) Department, dated 9-8-2017. These G.Os., were issued under the provisions of Rule 138 of the GST Rules of the respective State of Telangana and Andhra Pradesh.
6. The primordium of the case of the petitioner is that as result of the constitutional mandate contained in clause (2) of Article 246(A) of the Constitution of India, Parliament alone has the power to make laws with respect to inter-State trade or commerce involving supply of goods or services and that therefore the State Governments are denuded of the power to lay down any conditions governing the inter-State supply of goods or services.
7. The Learned respective Special Standing Counsel appearing for the States of Andhra Pradesh and Telangana, however, submitted that as Rule 138 of the CGST Rules has not been made effective so far, in order to ensure that the tax receivable by the respective recipient States is not evaded, both the States have issued the respective G.Os. prescribing generation of e-waybill by the recipient dealer of the respective States. They sought to justify their power with reference to Rule 138 of the States GST Rules, i.e. the Andhra Pradesh Goods and Services Tax Rules, 2017 and the Telangana Goods and Services Tax Rules, 2017.
8. Prima facie, this Court is of the opinion that when the Constitution has conferred exclusive legislative power on the Parliament in respect of supply of goods or of services or both in the course of inter-State trade or commerce, the State Governments are denuded of the jurisdiction to prescribe any Rules governing such transactions. Further, reliance on Rule 138 of the CGST Rules, which is in pari materia in the State Rules framed by both the States, is misplaced. For better appreciation of this aspect, Rule 138 of the A.P. Goods and Services Taxes Rules, 2017, is reproduced hereunder.
138. E-way Rule. – Till such time as an E-way Bill system is developed and approved the Council, the Government may, by notification, specify the documents that the person in charge of a conveyance carrying any consignment of goods shall carry while the goods are in movement or in transit storage.
A perusal of the above reproduced Rule does not show that the same is made with reference to the interState movement of goods or services. As the State Legislature is competent to make laws only with reference to the intra-State movement of goods or services, Rule 138 has to be construed as being applicable only to such goods or services. This being the position, prima facie this Court is of the opinion that G.O.Ms. No. 309, dated 24-7-2017, as extended by G.O. Ms. No. 446, dated 3-10-2017, upto 31-12- 2017, issued by the State of Andhra Pradesh, and G.O. Ms. No.180, dated 9-8-2017, issued by the State of Telangana, are not enforceable insofar as the inter-State movement of goods and services is concerned.
9. At the hearing, it is brought to the notice of this Court that a batch of writ petitions raising these issues is pending and counter affidavits have not been filed so far. Therefore, these Cases are adjourned to 2-1-2018. The Learned Special Standing Counsel for Commercial Taxes of both the States have undertaken to furnish the details of the writ petitions filed raising similar issues within three days. The Registry shall post all these cases together on the next date of hearing.
10. As regards the interim relief sought by the petitioners, in view of the prima facie findings arrived at by this Court hereinbefore, we are of the opinion that the detention of goods along with vehicles by the States of Andhra Pradesh and Telangana only on the ground of non-generation of e-waybill by the traders of their respective States receiving the goods, is not permissible. However, in order to address the apprehension of the Learned Special Standing Counsel for Commercial Taxes of both the States that there is a likelihood of evasion of tax by certain traders if proper check is not administered, the following directions which include that of general in nature applicable to all cases in future, till Rule 138 of the CGST Rules notified or pending further orders, whichever is earlier are issued.
(i) The goods along with the vehicles belonging to the petitioners shall be released on their executing a bond to the effect that in the event of determination of tax liability, they will pay the tax along with the penalty, if any.
(ii) Both the State Governments shall prepare a proforma bond to be executed by the custodian of the goods at the time of their interception in either of the States of Andhra Pradesh and Telangana to the effect that in the event of determination of tax liability they will pay the tax and penalty, if any. It is made clear that if the custodian is not the dealer, the latter will be vicariously liable for the bond executed by the former.
(iii) Wherever e-way bill/tax invoice/delivery challan of the originating State is produced by the custodian of the goods at the time of check, the goods/vehicle shall not be seized or detained only on the ground that the goods are not accompanied by the e-way bill generated by the traders receiving goods in either of the two States.
(iv) The officer who checked/intercepted the goods shall furnish the details of the movement of the goods, tax invoice/e-way bill/delivery challan of the goods to the officials concerned of the originating State and also to the Commercial Tax Department of the receiving State.
