While ruling against Kia Motors India, the Madhya Pradesh High Court held that suppliers are legally obliged to inform the authorities about the movement of goods exceeding the value of Rs. 50 thousand, even if the reasons are not related to supply.

The Division Bench of Justice Sheel Nagu and Justice Hirdesh observed that such obligation is outlined in Rule 138(1)(ii) of the Goods and Services Tax Rules, and it requires the electronic filing of Form-A GST, EWB-01 on the common portal along with other necessary information.

The Bench, therefore, concluded that since the petitioner had failed to fulfil the requirement as mentioned under GST Rules, hence the entry of the demo car into the State of Madhya Pradesh without providing the mandatory information makes it subject to GST.

Advocate Himanshu Khemuka appeared for the Petitioner, whereas Assistant Solicitor General Pushpendra Yadav appeared for the Respondent.

The petitioner's main argument was that the demo vehicle transported in the State of Madhya Pradesh was not intended for sale and, therefore, should not be subject to GST. Referring to Section 7 of the Goods and Services Tax Act, specifically the definition of the term ‘supply’, the petitioner argued that bringing a demo vehicle into the State should not make the transaction subject to GST as there was no financial consideration involved in the absence of a sale or purchase.

Opposing to same, the counsel representing the State argued that based on the provisions of Section 129 of the GST Act and Rule 138 of the GST Rules, the movement of goods exceeding the value of Rs. 50,000, even if they do not fall under the definition of supply, still becomes subject to GST.

After considering the submission, the Bench noted that as per Rule 138(1)(ii), the causing of movement of goods exceeding the value of Rs.50,000/- even for reasons other than supply, makes it incumbent upon the supplier to inform about the supply of goods in Form-A GST, EWB-01 electronically on the common portal along-with other information as required.

The Bench also noted that no such information as mandatory in Rule 138(1) of GST Rules, was given by the petitioner supplier.

Accordingly, the High Court dismissed the petition after finding no fault or jurisdictional error in the order of the Joint Commissioner, State Tax, Bhopal Division.

Cause Title: M/s Kia Motors India Private Ltd v. The State of Madhya Pradesh and Ors.

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