TMI Blog2018 (12) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... the transfer of property in goods vests with the purchaser, at Puthucherry itself, wherein the supply terminated. The registration obtained in one State is also effective throughout India by virtue of Section 46 of the M.V. Act. This is the volition of the purchaser and the movement of the goods after the supply has terminated, in accordance with Sections 7 & 8, read with Section 10 of the IG&ST Act is not the concern of the taxing authorities or even the motor vehicle authorities, the latter of whom is only concerned with the permanent registration being made within the State in which the vehicle is proposed to be used. The requirement also is that, necessarily the vehicle would have to be permanently registered in the State in which the purchaser has his residence or place of business and normally intends to keep it for use as provided in Section 42 of the M.V. Act. It was perfectly possible for the dealer to have transported the vehicle on the strength of a trade certificate but however, made the delivery of the vehicle in Thiruvananthapuram only after taking either a temporary registration or a permanent one from the registering authority having jurisdiction over Thiruv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent : SRI C E UNNIKRISHNAN SPL GP JUDGMENT Vinod Chandran, J The issue arises as to whether the omission to upload e-way bill with respect to the transport of a car purchased in Puthuchery, by a person normally residing in Thiruvananthapuram, attracts Section 129 of the Kerala State Goods and Services Tax Act, 2017 (KSG ST Act for brevity). The impugned judgment found that there should be an adjudication carried on and refused release of the vehicle. In appeal, at the admission stage, we prima facie found that there is no requirement for detaining the vehicle for reason of there being no mandate to upload an e-way bill when the transport is of used personal effects coming within the description of used personal and household effects as found in the Annexure, exempted by subrule (14) of Rule 138 of the Kerala Goods and Services Tax Rules, 2017 (KG ST Rules hereafter); which a used car would be. The State at that stage sought for time to file a counter affidavit since the dismissal of the writ petition was at the admission stage itself. 2. A counter affidavit has been filed and we have heard Sri.Harishankar V Menon on behalf of the appellants and Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... driven the vehicle from Puthuchery to Thiruvananthapuram there would have been no such detention or demand for tax. The demand raised as per the notice issued and the order passed was the applicable tax and penalty at 100% of the tax applicable, being the IGST which the dealer had already collected as evidenced from the invoice produced at Ext.P1. 6. The learned Single Judge rightly found Section 129 to be the mechanism for detention,seizure and release of goods and conveyance, in transit, with interim release controlled by sub-section (4) of Section 67, by virtue of Section 129(2). Release of goods detained can be effected under sub-clause (a) of Section 129, when the owner comes forth, on payment of applicable tax and penalty coming to 100% of tax and when any other person so offers, on payment of applicable tax and penalty equal to 50% of tax under sub-clause(b). Sub-clause (c) of Section 129(1) speaks of release, also on furnishing security under clause (a) or (b), as prescribed. If (a) or (b) is complied and the goods released, then the proceedings stand concluded and on furnishing security there should be an order passed under Section 129(3). It is also provided that on fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch event, he or the transporter may generate the e-way bill on the common portal. Then the learned Single Judge raised a doubt as to whether there was a completed intra-state sale or whether the transport was for an inter-state sale. The contention that the car was a used personal effect was also noticed. The learned Single Judge refused to venture into such adjudication for it being premature. Considering the fact that the appellant wanted only release of the goods as an interim measure, the learned Single Judge confined his consideration to that. 8. Considering the issue of an interim release, the learned Single Judge held that if the 2nd appellant had driven the car by himself to Puthuchery then, the tax regime would not have hampered the transport. But however, the 2nd appellant having entrusted the vehicle to a transporter, the consequence of his driving the car from Puthuchery to Kerala remains in the conjectural realm, it was observed. Sub-rule (2) of Rule 138 was noticed to find that the registered person as a consignee or as a consignor has to generate e-way bill and upload it in the common portal. The decision in Indus Towers (supra) was relied on to find that if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the vehicle was entrusted to the dealer, the 1st appellant to transport the same to his place of residence at Thiruvananthapuram. It is submitted that Sections 7 and 10 of the Integrated Goods and Service Tax Act, 2017 (IG ST Act), leads to the irresistible conclusion that an inter-State supply of goods would be completed only when the movement of goods terminates with delivery to the recipient. The goods and services tax regime is a destination based regime where the delivery of goods decides the nature of the transaction whether it is inter-State or intra-State. It is submitted that there could be no doubt that the present transaction is an inter-State transaction and there can be no delivery found, at Puthucherry merely by reason of the temporary registration obtained for the car, which is an essential requirement for delivery to the purchaser. The parties to the transaction too understood it to be an inter-State sale, hence the IG S tax collected in the invoice. A trade certificate as can be seen from Rule 41 of the CMV Rules cannot be the document on which delivery made to a purchaser of a vehicle intended for use in the roads. Rule 42 requires the holder of a trade certific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) has absolutely no application and if at all it can be applied, it has to be in favour of the State, concludes the learned Special Government Pleader. 12. We feel it would be worthwhile to delve into the aspect of whether the sale was an intra-state one or an inter-State one. The seller understood it to be an inter-State one, as is revealed from the invoices, both of sale of car and the transportation. Here, we have to observe that, if it was an intra-State sale, then, the State of Kerala, where the vehicle was detained would have absolutely no tax benefit and there is no cause for detention. When it is said that, if the car was driven by the purchaser from Puducherry to Kerala there would be no cause of detention, then it should be understood as an intra-State sale and in that case, if the goods were detained within Puthuchery, probably there could be a contention raised by the Union Territory of Puthuchery as to contravention of the taxing provisions. Tax which was due to the Union Territory will not flow into its coffers could be a contention taken. As has been rightly pointed out by the learned Special Government Pleader(Taxes)the G ST regime being destination based a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epeat, the transaction of supply itself, should occasion the movement of the goods. Then the location of the supply would be fixed as the place where the goods are delivered, so as to apply Section 7 or Section 8. 15. A transaction which terminates with the supply within a State is an intra-State supply. However, when a dealer or manufacturer within the State of Kerala purchases goods for the purpose of further sale or manufacture within the State of Kerala, from an outside State dealer and transports it to their manufacturing unit or dealership, then the transaction occasions the movement of goods. Though the sale occurs in that outside State, the place of supply of goods is in this State since the transaction of sale occasions the movement of goods from one State to another and the supply is terminated in this State; whether the movement is by the supplier or the recipient himself. But, when a person residing in one State goes to another State and purchase goods for his own use, the supply with respect to the transaction terminates on the individual taking possession of the goods in that other State. The movement of the goods, after such sale is terminated and delivery is effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concern of the taxing authorities or even the motor vehicle authorities, the latter of whom is only concerned with the permanent registration being made within the State in which the vehicle is proposed to be used. The requirement also is that, necessarily the vehicle would have to be permanently registered in the State in which the purchaser has his residence or place of business and normally intends to keep it for use as provided in Section 42 of the M.V. Act. 18. Madhu M.B. was a case in which the goods were detained for reason of no nexus between the documents accompanied and the actual goods under transport. The Division Bench found that under Rule 140(2), there is a provision for release of goods on a provisional basis, but only on execution of a bond in Form GST INS 04 and furnishing of security in the form of a bank guarantee equivalent to the amount of applicable tax and penalty payable. The Division Bench after considering the provision requiring production of goods on a demand made; also directed expeditious finalization of adjudication proceedings, since the dealer would not be entitled to deal with the goods till adjudication is over. Pertinent is the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undoubtedly the vehicle was temporarily registered at Puthuchery. It cannot be said that the temporary registration cannot decide the aspect of sale, especially when the temporary registration was taken out in the name of the purchaser. If the vehicle need not be moved out of the dealership for the purpose of temporary registration, the question arises as how it ran for 17 kilometers; obviously after the registration. The transfer of property of goods was occasioned on the temporary registration being made, but, however, the seller-dealer understood it as an inter-state sale since the purchase was intended for use in a State other than the State from which the sale was effected. The purchaser had also paid IGST, a portion of which would be accrued to the State in which eventually the car would be used. 21. In this context, we have to see KTC Automobiles (supra) wherein the Department, under the Kerala General Sales Tax Act, proceeded under Section 45A on the premise that the dealer had shown 263 numbers of car having sold from its Mahe Branch when the cars had never been delivered at Mahe by the manufacturer. The allegation was that the cars were merely registered by the motor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of possession can take place only when the vehicle reaches the place where the registering authority will be obliged to inspect for the purpose of finding out whether it is a roadworthy and registrable motor vehicle and whether its identification marks tally with those given in the sale invoice and the application for registration. The possession can lawfully be handed over to the purchaser at this juncture because law requires the purchaser as an owner to make an application for registration but at the same time the law also prohibits use of the motor vehicle by the owner until it is duly registered by the registering authority. 21. Hence, in order to satisfy the requirement of law noticed above, the dealer can deliver possession and owner can take possession and present the vehicle for registration only when it reaches the office of the registering authority. With the handing over of the possession of a specific motor vehicle just prior to registration, the dealer completes the agreement of sale rendering it a perfected sale. The purchaser as an owner under the Motor Vehicles Act is thereafter obliged to obtain certificate of registration which alone entitles him to enjoy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was driven by the petitioner, there was absolutely no reason to upload an e-way bill. However, as noticed at the beginning, the purchaser having taken delivery of a fancy car at a fancy price was apprehensive of driving the car from Puthuchery to Kerala. Quite understandable, given the traffic and road conditions. The fact also is undisputed that the vehicle has run for 17 kms as is seen from Ext.R1(a). This is the background in which we have to understand the purchaser having taken delivery of the vehicle at Puthuchery, and its entrustment to the dealer to transport the vehicle from Puthuchery to Thiruvananthapuram. The sale made by the dealer and the service of transportation of the vehicle are quite distinct transactions; one of supply of goods and the other of service. The transport cannot be understood as one in the course of sale for the purpose of supply at Thiruvananthapuram.The service of transportation was for a consideration on which also tax was paid by the dealer. The transportation was by the logistics wing of the selling dealer who had collected tax on the consideration for the service rendered. 24. Now the question also arise as to whether the brand new car tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qualifying words, ordinarily embraces such tangible property as is worn or carried about the person, or tangible property having some intimate relation to the person of the testator or testatrix; where it is required by the context within which the term appears, it may enjoy a broader meaning. In re Stengel's Estate, Mo.App., 557 S.W.2d 255, 260 26. Rana Hemant Singhji was in the context of the specific words employed in the definition that was considered; which was as follows: (4A) Capital asset means property of any kind held by an assessee, whether or not connected with his business, profession or vocation, but does not include (i)... (ii) personal effects, that is to say movable property (including wearing apparel, jewellery, and furniture) held for personal use by the assessee or any member of his family dependent on him It was held a close scrutiny of the context in which the expression occurs shows that only those effects can legitimately be laid to be personal which pertain to the assessee's person. In other words, an intimate connection between the effects and the person of the assessee must be shown to exist to render them personal effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in point wherein the plaintiffs were manufacturers of motor cars, who marketed and sold the cars manufactured through its authorised distributors. An individual purchased a car with warranty, which was for the new vehicle and for the first owner/user. The purchaser took delivery of the car and then sold it to a motor dealer, who advertised the car in a newspaper under the heading 'New Cars', which was challenged by the manufacturer. It was held that a car ceased to be new, when it was sold in retail by the authorised dealer and is registered with the local authority and had been driven away by a purchaser. Here also even accepting the fact that there need be no production of the vehicle for a temporary registration, it has to be noticed that the car had been driven for 17kms. The brand new car would have an odometer showing zero and necessarily it was driven only after the supply to the purchaser. The purchaser came to the possession of the vehicle on its retail sale and had taken out a registration albeit temporary, in his name, as also an insurance, the policy covering his risk as a registered owner of the vehicle. From the moment the vehicle is temporarily registered, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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