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Case Law Details

Case Name : Fabricship Pvt. Ltd. Vs Union of India Through the Secretary (Bombay High Court)
Appeal Number : Writ Petition No. 2611 of 2021
Date of Judgement/Order : 21/06/2024
Related Assessment Year :
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Fabricship Pvt. Ltd. Vs Union of India Through the Secretary (Bombay High Court)

The Bombay High Court recently deliberated on whether the transportation of machinery from Jawaharlal Nehru Port Trust (JNPT) to a factory constitutes a taxable supply under the Maharashtra Goods and Services Tax Act, 2017 (MGST Act). Fabricship Pvt. Ltd. challenged penalties imposed by the State GST Authority for not accompanying e-way bills during transportation.

Fabricship Pvt. Ltd. imported machinery exempt from Customs and Integrated Goods and Services Tax Act, 2017 (IGST Act) under the EPCG scheme. Despite clearance at JNPT, penalties were levied for not having e-way bills during transport to Surat. The High Court analyzed Sections 129(1)(a) and (b) of the MGST Act, which specify penalties for contravening transportation rules.

The Court observed that while e-way bills were absent, no tax liability existed since the goods were exempt post-customs clearance. It concluded that transportation to one’s own factory doesn’t constitute a taxable supply under Section 7 of the MGST Act. Hence, the imposition of penalties equivalent to tax applicable on goods was deemed inappropriate.

The Bombay High Court ruled in favor of Fabricship Pvt. Ltd., holding that no GST liability arises from transporting goods to its own factory post-customs clearance. The penalty was reduced to Rs. 25,000 under Section 129(1)(a), reflecting the lesser of two percent of the goods’ value or Rs. 25,000 for exempted goods.

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July 2024