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TMI Blog2018 (12) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Sri C. E. Unnikrishnan, the learned Special Government Pleader (Taxes) on behalf of the State. 3. On facts it has to be noticed that the 1st appellant is a dealer in motor vehicles and the 2nd appellant purchased a Mini-Cooper car from the 1st appellant. A temporary registration in the name of the 2nd appellant was also taken from Puthuchery Motor Vehicles Department as also an insurance cover obtained. The 2nd appellant then, could have driven the vehicle to Thiruvananthapuram where he normally resides. However, the purchase being made of a fancy car at a fancy price he felt that he should not subject the car to a long journey from Puthuchery to Thiruvananthapuram. He hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 failure to pay tax and penalty there could be confiscation proceedings under Section 130, obviously intended at realisation of tax and penalty imposed. Rule 138 of the KG&ST Rules mandates furnishing of information prior to movement of goods, by generating an e-way bill, a copy of which, physical or mapped to a radio frequency identification (RFID), has to accompany the goods along with the sale invoice or bill of supply or delivery challan, when in transit. 7. The learned Single Judge looked at the decision in Commercial Tax Officer v. Madhu M.B (2017) 64 GST 9 (Ker) wherein a Division Bench of this Court found that for obtaining release, of the goods and vehicle detained under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hery 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 there is contravention of the provisions under the Act and Rules definitely Section 129 operates, as a result of which detention can be carried out. Consequence would be an order under Section 129(3) after affording an opportunity of hearing, and if tax and penalty is demanded, confiscation also could be ordered if the amounts demanded are not paid up. The learned Single Judge hence refused to release the vehicle as an interim measure, other than by resort to Section 129 and directed adjudication by the detaining officer under Section 129. 9. Before us, the learned Counsel appearing for the appellants contended that there was a temporary registration taken out by the 2nd appellant which indicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 certificate, being a dealer, to deliver a motor vehicle to a purchaser with registration whether temporary or permanent. 11. The temporary registration taken out for the car has in fact been taken out by the dealer without which the purchaser cannot take the vehicle out on to the public road. It is also argued that for the purpose of temporary registration the vehicle is never taken out of the dealership. There can also be no dispute, it is argued, that the transport was of a brand new car purchased by the 2nd appellant from the 1st appellant. If it never came into the possession of the purchaser then it cannot be treated as a used personal effect, even if a used car is found to be a personal effect. Without pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and the purchaser being from an outside State, it was understood by the seller that it was an inter-State sales. The State of Kerala stood to benefit by that understanding. There is no dispute that the tax payable on an inter-State sale was paid by the purchaser and the same reflected in the invoice issued by the seller. We however raise a caveat here, that the nature of the transaction whether it is inter-State or intra-State supply is to be decided from the provisions in the statute and not by the intention or understanding of the parties to the transaction. 13. In understanding inter-State and intra-State sale, one has to look at the IG&ST Act, specifically Chapter IV, which speaks of 'Determination of Natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 effected, whether it be inside the State or to outside that State, would be the prerogative of the purchaser, who owns the goods, in whom the property in such goods vests and such movement would not be that occasioned by the sale transaction or the supply thereon. 16. In the present case, a resident of Trivandrum within the State of Kerala went to the Union Territory of Puthuchery and purchased a car from a dealership there. It is the specific submission of the purchaser that the said car was not available within the State of Kerala for purchase, there being no dealership for the manufacturer within the State of Kerala. There is also no question of any tax evasion as of now, by a purchase made from outside the State, since there is a uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 that it was a case in which there was a discrepancy noticed with respect to the documents accompanied and the actual goods in transport. Indus Towers Ltd. considered two writ petitions where the detention was on account of no e-way bill having been uploaded or accompanied with the goods. In one, the transaction was return of goods after job-works and the other stock transfer from the dealers godown to their work site. Both were instances where the dealer asserted the transport to be without liability to tax, but technically could have been otherwise; meaning a sale. In the present case as we noticed the transaction admittedly was of sale, with liability to tax and the applicable tax having been paid as evidenced from the invoice accompanying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 vehicles department of Mahe and the cars never physically reached there. Mahe being a Union Territory, at that point, levied lesser tax on the sale of motor vehicles than Kerala from which State actually the sale was made, the purchasers being all residents of the State of Kerala. The specific contention raised by the dealer as seen from paragraph 8 was that the first sale of a motor vehicle is only at the place of registration of the vehicle by the authority empowered to register motor vehicles under chapter IV of the Motor Vehicles Act. It was held: 19. From the above submissions and countersubmissions of the parties as well as relevant statutory provisions in the Motor Vehicles Act, 1988; the Central Motor Vehicles Rules, 1989; Section 4(2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the possession of the vehicle in practical terms by enjoying the right to use the vehicle at public places, after meeting the other statutory obligations of insurance, etc. Hence, technically though the registration of a motor vehicle is a post-sale event, the event of sale is closely linked in time with the event of registration. Neither the manufacturer nor can the dealer of a motor vehicle permit the intended purchaser having an agreement of sale to use the motor vehicle even for taking it to the registration office in view of the statutory provisions already noticed. Hence lawful possession with the right of use is permissible to be given to the intended owner only after reaching the vehicle to the office of the registering authority. Thus seen, in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 taken delivery of by the 2nd appellant at Puthuchery and transported to Thiruvananthapuram can be termed to be a used car and hence a used personal effect. How "used" is generally understood, is evident from the various definitions as available in the dictionaries as extracted here-under:- Oxford Advanced Learner's Dictionary: Used: that has belonged to or been used by somebody else before SECOND-HAND: used cars New Webster's Dictionary: Utilized in or employed for some accomplishment or function; having undergone use; secondhand Collins COBUILD English Dictionary: A used car has already had one or more owners Would you buy a used car from this man.. His only big purchase has been a used Ford. We see from the various definitions as extracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 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 effects." The silver bars or bullion, by no stretch of imagination could be deemed to be effects meant for personal use was the finding. Even the sovereigns and silver coins, which were asserted to be brought out of iron safes, only for puja, for purposes of ornamentation of the deity, was also held to be not personal effects, especially in the context of the factual finding that they were delivered to the Bank for sale. The decision has no application here. The reference to Customs Tariff Act is also irrelevant since the taxing statute herein does not, by specific words or intendment adopt that definition available in the other enactment. Even going by the normal connotations, a car is the personal effect of the person, who carries the registration in his name, who also carries with it the liability to compensate any third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the purchasers name; it is deemed that he is keeping it in his possession for use on the roads and any liability incurred in such use as against third parties would be the sole responsibility of the registered owner and not the supplier, who is the authorised dealer of the manufacturer. 28. We do not understand how the State could take a contention that if the car had been driven into the State of Kerala from the U.T. Of Puthuchery; then there could not have been a detention under Section 129, since then there would have been no question of uploading of e-way bill. We cannot also comprehend how an intra-State sale would be converted to an inter-State sale merely for reason of it being transported in a carriage. A purchase of, say, a Television by a resident of Kerala from Bangalore would be an intra-State sale and the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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