In a significant case the Madhya Pradesh High court while upheld the levy of Goods and Service Tax (GST) against Kia Motors held that petitioner failed to furnish information for entry of demo cars in Madhya Pradesh as per Rule 138 of Goods and Service Tax Rules, 2017 .
Petitioner Kia Motors India Private Ltd filed the writ petition against the order passed by the Joint Commissioner. The appellate authority partly allowed appeal of petitioner-assessee by reducing the tax levied 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 penalty of Rs.6,60,000.
He challenged the levy of GST on demo vehicles transported in Madhya Pradesh and he argued that it was not for sale hence not eligible for GST .
Further, Himanshu Khemuka, the counsel appearing for the petitioner, relied upon section 7 of the Goods and Service Tax Act, 2017 argued that bringing of demo vehicles into the State of Madhya Pradesh would not render the transaction eligible to GST since no financial consideration is involved in the absence of sale or purchase.
On the opposite side, A.D. BAJPAI the counsel for the respondent contended that as per the provisions of Section 129 of Goods and Service Tax Act and Rule 138 of GST Rules, the movement of goods exceeding the value of Rs.50,000/-, even if they do not qualify the definition of supply become eligible for GST.
The Division Bench after considering the submissions of the both parties observed that according to rule 138 (1)(ii) GST Rules clear that for causing movement of a goods exceeding the value of Rs.50,000/-, the supplier should inform about the supply of goods even if it was other than supply electronically on the common portal. Therefore in the present case no such information as mandatory in Rule 138(1) of GST Rules, was given by the petitioner supplier.
Thus, the division bench of Justice Sheel Nagu and Justice Hirdesh held that assessee did not provide any information regarding the entry of demo cars into the State of Madhya Pradesh renders hence it should be eligible for GST.
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