Buying car in one city and transferring is problematic
If you want to buy a car in one city and transfer it to another then ensure that it is done after the e-Way bill and all GST formalities are completed, else there is a possibility that your new car will be seized by the tax authorities and you may end up paying a penalty.
This follows a ruling by the Kerala High Court in a matter where Vishnu Mohan from Thiruvananthapuram went to Puducherry and purchased a car from a dealer. The buyer got the vehicle temporarily registered in Puducherry and entrusted it to the dealer to transport it to Thiruvananthapuram on payment of transport charges. I-GST (Integrated Goods and Services Tax) was charged on transport charges. However, the car was detained in Kerala.
The detention was made on three grounds — the consignment is an inter-State supply of goods being more than Rs. 50,000 which makes e-Way bill mandatory, temporary registration at Puducherry was seen with suspicion and compensation cess was collected at 20 per cent instead of 25 per cent.
Since rules prescribe release only after payment of penalty, a notice was served. Both the buyer and the dealer approached the Court and argued that the said transportation was caused by unregistered person and accordingly, e-Way bill requirement should not arise under K-SGST (Kerala State GST) Rules.
Transportation, e-Way bill
The petitioners also submitted that the matter involved transportation of ‘used personal and household effects’ hence there is no requirement to generate e-Way bill. But the tax authorities contended that the said vehicle is not a used vehicle. In the instant transaction, the dealer could not have completed the transaction of selling the car until it is delivered to the purchaser at the agreed destination.
The Court ruled that if the conditions under the Act and Rules are not complied with, Section 129, which talks about confiscation of goods, will apply. The petitioners are entitled to adjudication, but they will have to prove that the goods being transported stand exempted from the rigours of the GST regime, it said. more
This follows a ruling by the Kerala High Court in a matter where Vishnu Mohan from Thiruvananthapuram went to Puducherry and purchased a car from a dealer. The buyer got the vehicle temporarily registered in Puducherry and entrusted it to the dealer to transport it to Thiruvananthapuram on payment of transport charges. I-GST (Integrated Goods and Services Tax) was charged on transport charges. However, the car was detained in Kerala.
The detention was made on three grounds — the consignment is an inter-State supply of goods being more than Rs. 50,000 which makes e-Way bill mandatory, temporary registration at Puducherry was seen with suspicion and compensation cess was collected at 20 per cent instead of 25 per cent.
Since rules prescribe release only after payment of penalty, a notice was served. Both the buyer and the dealer approached the Court and argued that the said transportation was caused by unregistered person and accordingly, e-Way bill requirement should not arise under K-SGST (Kerala State GST) Rules.
Transportation, e-Way bill
The petitioners also submitted that the matter involved transportation of ‘used personal and household effects’ hence there is no requirement to generate e-Way bill. But the tax authorities contended that the said vehicle is not a used vehicle. In the instant transaction, the dealer could not have completed the transaction of selling the car until it is delivered to the purchaser at the agreed destination.
The Court ruled that if the conditions under the Act and Rules are not complied with, Section 129, which talks about confiscation of goods, will apply. The petitioners are entitled to adjudication, but they will have to prove that the goods being transported stand exempted from the rigours of the GST regime, it said. more
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With the advent of GST, situations have changed a bit concerning inter-sate sales. For example in present case, vehicle was purchased from a Registered Dealer in Puduchery. Being a Registered Dealer under GST, he will have to invoice first . When the Dealer raised Tax Invoice, what was the GST charged in the invoice? Is it IGST or CGST and UTGST? If GST mentioned in invoice is IGST (inter-sate), eWay Bill is mandatory and the car needs to be registered in destination State/UT and no RTO formalities need to be completed at dealers place. If GST mentioned in invoice is CGST and UTGST (intra-sate), no eWay Bill is needed but vehicle needs to be registered with RTO at UT and handed over to Customer. More importantly, movement of vehicles outside UT after purchase, will attract provisions of MV Act I guess the problem faced by Customer arose due to methods followed in sending the vehicles out of UT and as a 'used' vehicle, may be on the same day or a few days after it was purchased. For new buyers from States other than Dealer's, it may be advisable that the buyer insists that only IGST must be charged by Dealer and the buyer will register the vehicle with RTO when received in buyers place. GST formalities (eWay Bill etc) are pretty simple for Dealer and can be completed with ease to comply with all interstate transportation formalities. However will the Dealer be willing to pass on the extra price advantages available within the UT or will they ask for higher price when buyer insists on paying only IGST? Also the Dealer may be restricted to sell only within the UT they are in and not permitted to sell vehicles supplied to him my Manufacturer, outside his UT. This is very likely as Car Manufacturer's Dealers in Thiruvananthapuram will be adversely affected by direct sales from UTs at lower prices. If this is the case, buyer may not be able to insist on charging IGST on invoices. This may also be viewed as a positive outcome of GST, reducing misuse of certain facilities which are limited to only UTs, by people outside UTs. more
Nov 17
yes sir, it is for new vehicles but besides , the GST I thought for old vehicles also there are many hassles, so mentioned it here for the benefits of the circle members.Buying new cars from one state and taking it to other state (that too because of lower taxes IN SOME UNION TERRITORY STATES) like may not be more cases, but people who are on transferable jobs,resettling in other states due to cross country migrations, and many other reasons.If you think my comments were not relevant than may be ignored. We are not like govt officials who can make such typical reply ,sorry. more
Nov 17
To streamline all Motor Vehicle Act, which are all 100-years old, every state made funny rules and the vehicle buyer suffer, Central Govt Ministry under Gadkari, tried hard to abolish them and introduce simple transparent procedures so that similar to GST, every state will have same rules & taxes and once registered and paid road taxes, the owner can use anywhere across India. Unfortunately getting all states come together (similar to GST implementation) will take a decade if not more. So we all should demand for uniform rules for Motor Vehicle Act. more
Nov 16
You are right sir. But our fellow citizens are also very clever. Even after shifting to another state n city they don't register their vehicles in the respective city ,state as n don't pay vehicle tax ,which is also mandatory. But since the lifetime vehicle tax is levied the state where it is paid, whether that gets transferred to the new destination is not known. Many times apart from GST many incidences are reported that the stolen vehicles or used in some fraud, are also sold to outside states, hence the police verification also takes time in transferring the vehicle to other states. more
Nov 17
It was the duty of the dealer in Puducherry to inform the buyer of the rules of registration and moving onto another city/state seeking fresh vehicle registration. Also, it is advisable for buyers of transferring registration and re-sale of such movable property to know before hand. more
Nov 16
