The Madhya Pradesh High Court has delivered a verdict against Kia Motors India, stating that suppliers are legally obligated to provide information regarding the movement of goods exceeding the value of Rs. 50,000, even if it is not directly related to a sale.
The Division Bench, comprising Justice Sheel Nagu and Justice Hirdesh, emphasized that this obligation is clearly outlined in Rule 138(1)(ii) of the Goods and Services Tax (GST) Rules, which requires electronic filing of Form-A GST, EWB-01 on the common portal along with other necessary details.
The court concluded that since the petitioner, Kia Motors India, failed to fulfill the mandatory requirement as specified under the GST Rules, the entry of the demo car into Madhya Pradesh without providing the required information makes it subject to GST. The ruling came in response to Kia Motors India challenging an order passed by the Appellate Authority, which had reduced the tax levy and penalties imposed on the company.
Advocate Himanshu Khemuka represented Kia Motors India, while Assistant Solicitor General Pushpendra Yadav appeared on behalf of the respondent. Kia Motors India argued that the demo vehicle transported to Madhya Pradesh was not intended for sale and should not be subjected to GST. Referring to Section 7 of the GST Act, particularly the definition of "supply," the petitioner contended that bringing a demo vehicle into the state should not trigger GST liability as there was no financial consideration involved in the absence of a sale or purchase.
However, the state's counsel countered this argument by citing the provisions of Section 129 of the GST Act and Rule 138 of the GST Rules, which stipulate that the movement of goods exceeding the value of Rs. 50,000, even if they do not fall under the definition of supply, still attracts GST.
After careful consideration, the Bench noted that Rule 138(1)(ii) explicitly requires the supplier to provide information about the movement of goods exceeding Rs. 50,000, regardless of the purpose, in Form-A GST, EWB-01. It further observed that the petitioner had not fulfilled this mandatory requirement.
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