M/S Hemanth Motors vs. State Of Karnataka

Held

The Court allowed the writ petition. It held that the appellate authority should have considered the petitioner's case in light of Rule 138(10) of the Central Goods and Services Tax Rules, 2017, which provides for an extension of eight hours after the expiry of an e-way bill. The Court found that the conveyance had reached the destination well within the e-way bill's validity period, and the unloading was occurring without further transit. The failure to consider Rule 138(10) resulted in an improper and untenable order. Consequently, the notice dated January 7, 2019, and the orders dated January 8, 2019, and November 28, 2019, were quashed. The Court did not explicitly address the challenge to the constitutional validity of Section 129, as the petitioner confined their arguments to prayers [b] and [c].

Facts

M/s. Hemanth Motors, a registered dealer, purchased two-wheeler vehicles and dispatched them from Hosur, Tamil Nadu, to Bengaluru with valid e-way bills. The e-way bills were valid from December 31, 2018, 10:37 PM to January 1, 2019. The petitioner contends that the vehicles reached the destination on January 1, 2019, before the e-way bills expired, but unloading commenced on January 2, 2019. The third respondent issued a notice under Section 129(3) of the Act on January 7, 2019, followed by a demand order on January 8, 2019. The petitioner's appeal was dismissed by the fourth respondent on November 28, 2019. The petitioner filed a writ petition challenging these actions and provisions.

Key Issues

1. Whether Section 129 of the KGST/CGST Act, 2017, is ultra vires the Constitution of India, arbitrary, and violative of Articles 14 and 19(1)(g). 2. Whether the notice dated January 7, 2019, and the order dated January 8, 2019, passed by the third respondent, and the appellate order dated November 28, 2019, passed by the fourth respondent, are liable to be quashed. Petitioner's Arguments: The petitioner argued that Section 129 of the KGST/CGST Act, 2017, is unconstitutional. They also contended that the vehicles reached the destination within the validity period of the e-way bills, and the unloading process, which extended slightly beyond the expiry, should be considered in light of Rule 138(10) of the CGST Rules, 2017, which allows an extension of eight hours after the expiry of the e-way bill. The authorities failed to consider this rule, leading to an improper order. Respondents' Arguments: The respondents contended that the e-way bills had to be valid at the time of inspection, even during the unloading process, as the vehicles were still being unloaded from the conveyance.