M/S Kia Motors INDIA Private LTD. vs. The State Of Madhya Pradesh

Held

The Court held that the movement of goods exceeding the value of Rs. 50,000/- is subject to GST, even if it is for reasons other than supply, as stipulated in Rule 138(1)(ii) of the GST Rules. The Court found that the petitioner failed to provide the mandatory information required under Rule 138(1) before commencing the movement of the demo car into Madhya Pradesh. Consequently, the entry of the demo car into the State was deemed exigible to GST. The Court found no fault or jurisdictional error in the order of the appellate authority. Therefore, the writ petition was dismissed.

Facts

The petitioner, M/s Kia Motors India Private Ltd., filed a writ petition challenging an order passed by the Appellate Authority (Joint Commissioner, State Tax, Bhopal) on December 23, 2019. The Appellate Authority had partly allowed the petitioner's appeal, reducing the levied tax from Rs. 8,40,000/- to Rs. 5,40,000/- and the corresponding penalty from Rs. 8,40,000/- to Rs. 5,40,000/-, while setting aside the Cess of Rs. 6,60,000/- and its penalty. The petitioner's primary contention was that a demo vehicle transported into Madhya Pradesh was not for sale and therefore not exigible to GST. The revenue argued that movement of goods exceeding Rs. 50,000/- is exigible to GST even if not a supply, citing Section 129 of the GST Act and Rule 138 of the GST Rules.

Key Issues

1. Whether the movement of a demo vehicle into the State of Madhya Pradesh, not for sale, constitutes a 'supply' exigible to GST under Section 7 of the GST Act? Petitioner's Argument: The petitioner argued that the definition of 'supply' under Section 7 of the GST Act requires financial consideration, and since no sale or purchase was involved with the demo vehicle, it was not exigible to GST. They relied on CBDT circulars dated July 7, 2017, and November 22, 2017. Revenue's Argument: The respondent/State contended that under Section 129 of the GST Act and Rule 138 of the GST Rules, the movement of goods exceeding Rs. 50,000/- becomes exigible to GST, irrespective of whether they qualify as a 'supply'.