2017 (12) TMI 1781 - HC - GST

Inter-State E-Way Bill Requirement: Constitutional Division of Powers Examined

KAVERI ENTERPRISES Versus STATE OF ANDHRA PRADESH

The Court examined the validity of government orders requiring e-way bills for inter-State transactions in Andhra Pradesh and Telangana. It discussed the ... Seizure of goods along with vehicles - goods were not accompanied by an e-way bill generated by the recipient trader of Andhra Pradesh State/Telangana State - validity of G.O. Ms. No. 309, dated 24-7-2017/G.O. Ms. No. 180, dated 9-8-2017 - HELD THAT:- As the State Legislature is competent to make laws only with reference to the intra-State movement of goods or services, Rule 138 has to be construed as being applicable only to such goods or services. This being the position, prima facie this Court is of the opinion that G.O.Ms. No. 309, dated 24-7-2017, as extended by G.O. Ms. No. 446, dated 3-10-2017, upto 31-12-2017, issued by the State of Andhra Pradesh, and G.O. Ms. No.180, dated 9-8-2017, issued by the State of Telangana, are not enforceable insofar as the inter-State movement of goods and services is concerned. In view of the prima facie findings arrived at by this Court hereinbefore, we are of the opinion that the detention of goods along with vehicles by the States of Andhra Pradesh and Telangana only on the ground of non-generation of e-waybill by the traders of their respective States receiving the goods, is not permissible. The goods along with the vehicles belonging to the petitioners shall be released on their executing a bond to the effect that in the event of determination of tax liability, they will pay the tax along with the penalty, if any - Petition allowed. Issues:1. Validity of G.O. Ms. No. 309 and G.O. Ms. No. 180 regarding e-way bills.2. Constitutional mandate on legislative power between Parliament and State Governments.3. Enforcement of G.O. Ms. No. 309 and G.O. Ms. No. 180 in inter-State movement of goods.4. Detention of goods by Andhra Pradesh and Telangana based on e-way bill non-generation.Issue 1: Validity of G.O. Ms. No. 309 and G.O. Ms. No. 180 regarding e-way bills:The writ petitions challenge the validity of G.O. Ms. No. 309 and G.O. Ms. No. 180, which require the generation of e-way bills by traders in Andhra Pradesh and Telangana. These government orders were issued under the respective State GST Rules, aiming to regulate the movement of goods accompanied by e-way bills.Issue 2: Constitutional mandate on legislative power between Parliament and State Governments:The controversy arises from the interpretation of Article 246A of the Constitution, which delineates the legislative powers of the Parliament and State Legislatures concerning goods and services tax. The exclusive power of Parliament to legislate on inter-State trade or commerce has been highlighted, raising concerns about the State Governments' authority to impose regulations on such transactions.Issue 3: Enforcement of G.O. Ms. No. 309 and G.O. Ms. No. 180 in inter-State movement of goods:The High Court analyzed Rule 138 of the Andhra Pradesh and Telangana GST Rules, emphasizing that these rules do not specifically address inter-State movement of goods. Consequently, the Court opined that the government orders mandating e-way bills for inter-State transactions may not be enforceable under the current legal framework.Issue 4: Detention of goods by Andhra Pradesh and Telangana based on e-way bill non-generation:The Court acknowledged concerns raised by the Special Standing Counsel for Commercial Taxes regarding potential tax evasion due to the absence of e-way bills. While recognizing the need for proper tax administration, the Court issued interim directions, including the release of goods upon execution of bonds by traders and custodians, to address the issue of non-generation of e-way bills.In summary, the judgment delves into the validity of government orders mandating e-way bills for inter-State transactions in Andhra Pradesh and Telangana. It scrutinizes the constitutional division of legislative powers between the Parliament and State Governments, highlighting the exclusive authority of Parliament in matters of inter-State trade. The Court opines that the State Governments may lack jurisdiction to impose regulations on inter-State transactions under the current legal framework. To address concerns of tax evasion, the Court issues interim directions for the release of goods subject to certain conditions until the legal framework is clarified.