TMI Blog2023 (11) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... me of MRF Limited. - the supply of goods in the present case was inter-state supply and not intra-state supply and the same would attract the tax under the IGST Act. In the present case, Ext.P1 invoice issued by the petitioner describes the buyer/principal as the customer and the job worker as the consignee and it is in compliance of job work procedure contemplated under Section 143 of the Act read with Ext.P12 circular - the supply being intra-state supply, the said supply would be governed under the IGST Act and Rules made thereunder and not under the CGST/KSGST Act and Rules. In the present case, the place of supply is in the state of Tamil Nadu but the delivery of the goods is within the State of Kerala i.e, from Ernakulam to kannur. The goods of the petitioner were not intercepted for non-generation of KER-1 and was not part of Ext.P4 notice. The only allegation was that the petitioner had charged IGST instead of CGST and SGST. Even otherwise, this was time when the transition from the Kerala VAT tax regim to CGST/SGST tax regim was taking place, and the E-way bill system was being introduced and therefore, for not generating the KER-1 declaration, when the goods were ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot carried by the conveyance, and this contravention of the provisions of the Act requires the inspecting officer to issue notice under Section 129(3) of the GST Act for which the notice has already been issued and the goods would be released as per the law. 4. The petitioner is engaged in the manufacture and sale of Carbon Black. They transported one consignment of Carbon Black based on Ext.P5 purchase order of MRF Limited, Arakonam, in the State of Tamil Nadu hereinafter referred to as buyer/principal. It is stated that the buyer had instructed the petitioner to deliver the goods to its job worker M/s.Carbomix Polymers(India) Pvt.Limited, Kannur, in the State of Kerala. The said consignment was accompanied by Ext.P1 invoice. The invoice would mentioned the name of the buyer in the consumer name column and details of job worker were mentioned in the consignee name column. 5. The goods were intercepted by the 3rd respondent on 27.02.2018 in the morning at 08.30A.M when the transport reached Kozhikode, on the way to the place of job worker at Kannur, and Ext.P3 detention order was issued. Simultaneously, Ext.P4 notice under Section 129(3) of the CGST/KGST was issued. Ext.P4 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore submits that under Section 10(1)(b) of the IGST Act, in the present case, the place of supply would be the misplace of business place of MRF Limited which is in the State of Tamil Nadu. Learned counsel for the petitioner further submitted that under Section 7 of the IGST Act, a supply would be treated as an inter-state supply, if the location of the supplier and the place of the supply are in to different States. The place of delivery is immaterial to determine whether particular supply is inter-state supply inasmuch as what is relevant is the place of supply and not the place of delivery. The respondents have considered the place of delivery as place of supply, and have proceeded against the petitioner which is evident from notices issued as well as conclusion in Ext.P8 communication, which are against the express provisions of IGST Act. Learned counsel for the petitioner submits that for determining whether supply is an inter-state supply or not, it would depend upon the place of supply and not the place of delivery. The whole proceedings are based on erroneous assumption of jurisdiction by the respondents. 8. Learned counsel for the petitioner has also drawn attention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond to the notices issued, and the proceedings initiated by the respondents inasmuch as the goods were intercepted before they reached to the job worker. Learned counsel for the petitioner also submits that even if it is held to be an intra-state transaction by the proper officer, Section 77(2) of the CGST Act provides for a transfer of the amounts to appropriate account, by the proper officer and the assessee should not be required to pay interest on such delayed adjustment of IGST to CGST/SGST. Learned counsel for the petitioner submits that an E-way bill system for inter-state movement was rolled out only from 1st day of April,2018, whereas the transportation in question was on 27.02.2018, and therefore, the petitioner was not required to generate an E-way bill as mentioned in Ext.P8 communication/order. 11. Learned counsel for the petitioner also submits that as per Rule 138(1) of the KGST Rules, 2017, generation of KER-1 arises only when goods are transported into or outside the state under a delivery challan as prescribed under Rule 55 of the KGST Rules,where no invoice is raised. In the present case though the place of supply is in the state of Tamil Nadu, the transportat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration by this Court in the present writ petition;- 1) Whether the supply of goods to the job worker of M/s.MRF Limited, Arakonam, Tamil Nadu at Kannur, Kerala is inter-state supply or intra-state supply?; and, 2). Whether the proceedings initiated under Section 129 of the CGST Act/KGST Act against the petitioner are without jurisdiction. 14. Provisions of Section 10(1)(b) of the IGST Act, 2017, are relevant for the purposes of determining whether the supply made by the petitioner is intra-state supply or inter-state supply. Section 10(1)(b) of the IGST Act, 2017 reads as under: (b) where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person. 15. Section 7 of the IGST Act defines inter -state supply, which reads as under: Section -7.Inter-state supply- (1) Subject to the provisions of Section 10, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one developer or a Special Economic Zone unit. Explanation 1. - For the purposes of this Act, where a person has- (I) an establishment in India and any other establishment outside India. (ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or (iii) an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory. then such establishments shall be treated as establishments of distinct persons. Explanation.2 A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory. 17. Section 7 and 8 lay emphasis on supply of goods. Where the location of the supplier and the place of supply are in two different states then, such supply shall be treated as the supply of goods in the course of inter-state trade and commerce and in case where the supplier and the place of the supply of the goods are in the same State or same Union territory such supply of goods shall be treated as intra-state supply subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods at the time at which the movement of goods terminates for delivery to the recipient. Section 10(1)(b) is an exception to to the Section 10(1)(a). Under Section 10(1)(b) above, the place of supply of goods in case where the supply is made on the direction of the third person, it would be deemed as third person has recived the goods and the place of supply of such goods shall be the principal place of business of such third person. Section 20 of the IGST Act makes it clear that application of provisions of the Central Goods and Services Tax Act would be applicable to the job work as well subject to the provisions of the IGST Act and rules made thereunder. 20. From construction of Section 7,8 and 10, it would be evident that to determine whether the supply is inter-state supply or intra-state supply, it would depend on the place of supply and not delivery of the goods. In case, where the supply is made on the direction of a 3rd party, then place of the principal or the 3rd party shall be the place of supply as per Section 10(1)(b) of the IGST Act. In the present case, the delivery of goods was destined to M/s.Carbomix Polymers (India) Pvt.Limited, Kannur, Kerala, on instructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and Rules. 23. The issue regarding non-requirement of generation of KER-1 as raised by the learned Government Pleader is also required to be considered. Rule138(1) prescribes the documents which are to be carried by the conveyance of goods, which reads as under : 138. Documents to be carried with the consignment of goods. (1) A person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified, while transporting goods into or outside the State or where the goods are transported on a delivery chalan as specified under rule 55, along with the invoices, a declaration as mentioned in sub-rule (2), which shall be declared in the Kerala Value Added Tax Information System Portal immediately before such transportation of goods. 24. In the present case, the place of supply is in the state of Tamil Nadu but the delivery of the goods is within the State of Kerala i.e, from Ernakulam to kannur. The goods of the petitioner were not intercepted for non-generation of KER-1 and was not part of Ext.P4 notice. The only allegation was that the petitioner had charged IGST instead of CGST and SGST. Even otherwise, this was time when th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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