A person from Trivandrum goes to Pondicherry, purchases a car, and entrusts it to the car dealer to transport it to Trivandrum. On the way, in Kerala, the officials under the GST Act, intercept the vehicle and detain the goods, for no e-way bill accompanies the consignment. After responding to the statutory notice and after suffering a penalty order under S.129 of the GST Act, both the dealer and the purchaser file this Writ Petition.

2. Should the transport at the behest of an individual, an unregistered person, suffer the same statutory limitations as does the transport by a registered person or transporter? Does the second proviso to sub-rule (3) of R.138 of the KSGST Rules save the transaction? And can we treat the car, sought to be transported without an e-way bill, as an item of “used personal and household effects”?

Facts:

3. KUN Motors, the first petitioner, a company with a branch in Pondicherry, deals in luxury cars; Vishnu Mohan, the second petitioner, a resident of Trivandrum, purchased a car—Mini Cooper S Hatch—from KUN Motors (“the Company”). On 23 August 2018, the Company raised the Exhibit P1 invoice and sold the vehicle to Mohan. Then Mohan had the vehicle temporarily registered in Pondicherry on 27 August 2018, as seen from Exts.P2 and P2 (a). Mohan wanted the car transported to Trivandrum, where he intends to use it. So he requested the Company to transport the vehicle. Responding to Mohan’s request, the Company raised Exhibit P3 invoice, collected the transport charges, paid the IGST, and then dispatched the vehicle through its lorry to Trivandrum.

4. But en route, on 28 August 2018, the Assistant State Tax Officer, the first Respondent, intercepted the vehicle at Amaravila and detained it, invoking S.129 of the KSGST Act. When the officer detained the consignment, he took a statement from the lorry driver and also passed a formal order of detention, besides issuing a notice under S.129(3) of the Act. Exts.P4, P4(a) and P4(b) are the statement of the driver, the detention order, and the statutory notice respectively.

5. Through the Ext.P4(b) notice, the State Tax Officer demanded tax and penalty of Rs.33,59,056/-. The next day, that is on 29 August 2018, the Company and Mohan replied to the statutory notice. On the subsequent day, once again, the Company sent another reply. These are the Exhibits P5, P5 (a), and P5 (B). In turn, the Tax Officer on 1st September 2018 informed the Company and Mohan, through Exhibit P6, that their explanation was rejected, but he re-fixed the penalty—reducing it by about Rs.3 lakh.

6. Aggrieved, the Company and Mohan have filed this Writ Petition.

Submissions:

Petitioners’:

7. Sri.Harisankar V. Menon, the petitioners’ counsel, has submitted that Mohan, as the purchaser, wanted to transport the vehicle to Trivandrum, in his “independent capacity”. Because of the distance, Mohan played it safe and requested the very dealer that sold the car to transport it. According to him, the company transported the vehicle only as a transporter, but not as a dealer. In other words, with the sale of the vehicle, and its immediate registration in Mohan’s favour, the Company’ has ceased to have anything to do with the vehicle. Had Mohan driven the car down to Trivandrum by himself, Sri.Menon rhetorically responds, the authorities would have had no objection; only because Mohan wanted a safe transport of his vehicle, he has been made to suffer.

8. To elaborate, Sri.Menon contends that Mohan, as an individual, and without ever trading in cars, was found transporting the vehicle, so the entire GST regime remains inapplicable to him. He also stresses on, what he calls, Mohan’s honesty in getting the vehicle transported to Trivandrum, rather than have it permanently registered at Pondicherry, by paying less tax. On the Company’s paying the IGST on the car sale, Sri.Menon, once again, asserts that it was a generous gesture so Kerala, too, gets a share in the tax ‘pie’.

9. Sri.Menon, then, took me on a