Allahabad HC refers Larger Bench to adjudicate the Validity of Notification Issued by State of U.P requiring E-Way Bill for Inter-State Supply of Goods [Read Judgment]

The Allahabad High Court in M/s. Om Disposals vs. State of U.P & Ors. recently referred an issue, challenging the validity of a notification prescribing E-Way Bill for the purposes of import of goods for an amount over and above Rs. 50,000 from outside the State of Uttar Pradesh into the State of Uttar Pradesh under the provisions of Uttar Pradesh Goods and Services Tax (GST) Act, 2017, to a larger bench for proper adjudication.

The issue that came before the bench was whether the State Government of U.P had the jurisdiction to prescribe the documents required for an Inter State supply of Goods. The State of U.P had issued a notification on 21^st July 2017 requiring a E-Way Bill for the purposes of import of goods amounting over and above Rs.50000 in an interstate supply.

In the instant case, certain equipments purchased by the petitioner from outside the State of U.P was intercepted by the Mobile Squad Authorities (MSA). The MSA found that the transport was taking place without an E-Way Bill and thus directed the petitioner to pay a sum of Rs.1.08 Lacs towards tax and sale amount towards penalty. The first appellate authority also confirmed the order. That is when, the petitioner approached the High Court.

The Counsel for the Petitioner contended that the State authority has no jurisdiction to prescribe any documentation in respect of transaction which is covered under IGST Act. He further argued that only the Central Government had jurisdiction to prescribe the documents required for an interstate supply and that as the Central Government had not prescribed any such document till then ax, invoice, challan, goods receipt would be enough to meet the legal requirements. He pointed out that the same issue had come before the High Courts of Kerala, Madras and Telangana and Andhra Pradesh and these courts had clearly held that the State Legislature or the State Government has no power to make law/rules to govern interstate movement of goods and cannot even detain a consignment for not carrying documents prescribed by them for transporting goods in the course of interstate trade. He also placed reliance in the case of Satyendra Goods Transport Corporation, wherein a coordinate bench of the High Court held that the seizure and penalty imposed upon the petitioner based on the notification dated 21.07.2017 issued under Rules 138 of the U.P. GST Rules was illegal.

The Counsel for the Revenue placed reliance in the case of U.P. Kar Adhivakta Sangathan vs. State of U.P. and others, wherein the same Court had upheld the validity of the notification. He further contended that the judgment of the Lucknow Bench dated 13.04.2018 in Satyendra Goods Transport Corporation had not considered the judgment dated 24.08.2017 delivered in PIL No. 38246 of 2017 U.P. Kar Adhivakta Sangathan.

The division bench comprising of Justice Krishna Murari and Justice Ashok Kumar observed that the judgement in the case of U.P. Kar Adhivakta Sangathan did not refer the provisions of the GST Acts but only upheld the power of the State of U.P in issuing the notification. The bench found that the Division Bench then didn’t had the opportunity to address the issue raised before them. The Court observed that the judgment in U.P. Kar Adhivakta Sangathan (supra) has not been considered and discussed by the Lucknow Bench. “In our considered opinion, in such a situation, it would not be appropriate for us to comment on the correctness of either of the two judgments delivered by co-ordinate Benches of this Court or embark on a third independent course of our own. Judicial propriety requires us to refer the matter to a larger Bench for an affirmative pronouncement on the validity of the notification.” said the Court.