In a significant ruling, the Kerala High Court allowed to release goods detained by the Commercial Tax Department, Kerala by stating that only the Central Government is vested with the right to prescribe documents which must be carried while transporting goods from one state to another under the Integrated Goods and Services Tax (IGST) Act.
Justice Jayasankaran Nambiar, while overruling the contentions of the department, clarified that neither the State Government or the State Legislature has power to make Rules/law to regulate the interstate movement of goods.
Section 4 and 20 of the IGST Act and Act read with Rule 138 of the CGST Rules as amended by notification No.27/2017 – Central Tax provides that the power to prescribe the documents that are to accompany the transportation of goods in the course of interstate trade is conferred on the Central Government.
Analyzing the above provisions, the Court observed that the Central Government has, till date, not notified the documents that have to be carried by a transporter of the goods in the course of interstate movement.
It was therefore, held that “Under the said circumstances, and finding that neither the State Legislature nor the State Government would have the power to make laws/rules to govern interstate movements of goods in the course of trade, and for the purposes of levy of tax, I am of the view that detention in Ext.P5, for the sole reason that the transportation was not accompanied by the prescribed documents under the IGST Act/CGST Act/CGST Rules, cannot be legally sustained.”
Read the full text of the Order below.
