Calling the case as inter-state supply, the Karnataka High Court (Bengaluru Bench) has clarified that notwithstanding the fact that the petitioner (manufacturer & seller of Toyota cars in India) had not handed over the goods to the common carrier, the liability to pay IGST would arise only upon the movement of the goods terminating for delivery to the recipient at various places outside Karnataka.
Referring to Section 10(1)(a) of the IGST Act which stipulates that “where supply of goods involves movement of goods, whether by the supplier or by the recipient or by any other person (common carrier), the place of supply of goods shall be the location of the goods at the time at which the movement of the goods terminates for delivery the recipient”, the Court acceded to the request of the petitioner for no liability to pay any CGST or KGST or IGST, or Compensation Cess.
A Single Judge Bench of Justice SR Krishna Kumar observed that that the movement of the goods terminates for the purpose of handing over delivery to the recipient and to enable the recipient to take delivery of the goods, not when the goods are handed over to the ‘common carrier’ but only when the goods reach the destination for the purpose of enabling the recipient to obtain/take delivery.
The Bench found that the supply of goods in the present case is an inter-state supply and not an intra-state supply to attract CGST or KGST as contented by the respondent Department.
Therefore, the Bench concluded that the Show Cause Notice calling upon the petitioner to pay CGST / KGST on the said supply of goods is clearly erroneous, arbitrary and contrary to Section 10(1)(a) of the IGST Act, and the same deserves to be quashed.
Appearances:
Advocates Ravi Raghavan, Rohan Karia, and Nischal K M, for the Petitioner/ Taxpayer
Advocates Gowthamdev C Ullal and Jeevan J Neeralgi, for the Respondent/ Revenue
