Inter state movement of demo vehicles between distinct persons attracts GST

[CA Bimal Jain]

The Hon’ble Madhya Pradesh High Court in M/S KIA MOTORS INDIA PRIVATE LTD. VERSUS THE STATE OF MADHYA PRADESH THR. PRINCIPAL SECRETARY LAW, COMMISSIONER (GST) STATE TAX INDORE, COMMISSIONER STATE TAX BHOPAL (MADHYA PRADESH) , STATE TAX OFFICER, THE UNION OF INDIA - 2023 (6) TMI 578 - MADHYA PRADESH HIGH COURT dismissed the writ and held transporting demo vehicle from one state to another between distinct person attracts GST.

Facts:

M/s Kia Motors India Pvt. Ltd. (“the Petitioner”) challenged an order passed by the Appellate Authority dated December 23, 2019 upholding the demand of tax and penalty pertaining to non-payment of GST on transporting demo vehicles from one state to another between distinct person.

The Petitioner contended that bringing demo vehicle into the State does not make transaction exigible to GST as there is no sale or purchase transaction taken place.

The Revenue Department contended that the Section 129 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) r.w. Rule 138 of the Central Goods and Services Tax Rules, 2017 ("the CGST Rules”) the movement of goods exceeding value INR 50,000/- even if they do not fall under the definition of supply, becomes exigible to GST.

Issue:

Whether movement of demo vehicles from one state to another between distinct person attracts GST?

Held:

The Madhya Pradesh High Court in M/S KIA MOTORS INDIA PRIVATE LTD. VERSUS THE STATE OF MADHYA PRADESH THR. PRINCIPAL SECRETARY LAW, COMMISSIONER (GST) STATE TAX INDORE, COMMISSIONER STATE TAX BHOPAL (MADHYA PRADESH) , STATE TAX OFFICER, THE UNION OF INDIA - 2023 (6) TMI 578 - MADHYA PRADESH HIGH COURT held as under:

• Noted that, as per Rule 138(1)(ii) of the CGST Rules, causing of movement of goods exceeding the value INR 50,000/- even if the reason is not related to supply would requires taxpayer to fill Form-A GST, EWB-01 on the common portal along-with necessary information.
• Further noted that, the Petitioner has not provided any information which is mandatory as per Rule 138(1) of the CGST Rules.
• Held that, transportation of demo vehicles from one state to another between distinct persons is exigible to GST.
• Dismissed the petition after finding no fault in order of Appellate Authority.

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