Court Upholds Temporary E-Way Bill Notification, Dismisses Challenge to UP Government's Authority

Case Name:

U.P. Kar Adhivakta Sangthan (Regd.) Thru Gen. Secy. Vs. State of U.P. & 2 Others

Key Takeaways:

The UP government has the authority to prescribe temporary documents for goods in transit until the E-Way bill system is fully developed.

Temporary measures, including the use of existing forms, are valid if they align with GST rules.

The court emphasized the importance of allowing trade to continue smoothly during the transition to the new GST system.

Issue:

Did the Uttar Pradesh government have the authority to issue notifications and circulars prescribing documents for goods in transit before the E-Way bill system was fully developed and approved by the GST Council?

Facts:

The UP government issued a notification on July 21, 2017, and circulars on August 9 and 10, 2017.

These documents prescribed various forms to be carried with goods in transit.

The measures were intended to be temporary until the E-Way bill system was developed and approved by the GST Council.

The petitioner, an association of advocates, challenged these measures in public interest.

Arguments:

Petitioner's Arguments:

The state government lacks authority to prescribe documents without the GST Council's recommendation.

The use of existing VAT forms (Form 38 and Form 21) for GST purposes is inappropriate.

Government's Arguments:

Rule 138 of the GST Rules allows the government to specify documents for goods in transit until the E-Way bill system is developed.

The measures are temporary and necessary to ensure smooth trade during the transition period.

Key Legal Precedents:

The judgment doesn't mention specific case laws, but it refers to the following legal provisions:

Article 279A of the Constitution of India (regarding the GST Council)

Section 165 of the UP Goods and Services Tax Act, 2017

Rule 138 of the UP Goods and Services Tax Rules

Judgement:

The court dismissed the petition, ruling in favor of the state government. Key points of the judgment include:

The government has the authority under Rule 138 to prescribe temporary documents for goods in transit.

The notification and circulars are consistent with the GST Act and Rules.

The use of existing forms (Form 38 and Form 21) as E-Way Bill 01 and 02 is a valid interim measure.

These measures are temporary and will be replaced once the E-Way bill system is fully developed and approved by the GST Council.

FAQs:

Q1: Why did the court allow the use of old VAT forms for GST purposes?

A1: The court viewed it as a valid interim measure to ensure smooth trade during the transition to the new GST system.

Q2: Does this judgment apply to other states as well?

A2: While the judgment specifically addresses Uttar Pradesh, it could potentially influence similar cases in other states.

Q3: How long will these temporary measures remain in place?

A3: The judgment doesn't specify a timeframe. The measures will remain until the E-Way bill system is fully developed and approved by the GST Council.

Q4: Can businesses be penalized for not following these temporary measures?

A4: Yes, as the court has upheld their validity, businesses are required to comply with these temporary measures.

Q5: Does this judgment affect the GST Council's authority?

A5: No, the judgment recognizes the Council's role in approving the final E-Way bill system while allowing states to implement temporary measures in the interim.

Heard Sri Naveen Chandra Gupta, learned counsel for the petitioner, Sri Krishna Agarwal, learned counsel appearing on behalf of respondent no.1 and Sri C.B. Tripathi, learned Special Counsel for the State of U.P. The petitioner is an association of advocates and has preferred this petition in public interest.

The petition has been placed before us after nomination by the Hon'ble The Chief Justice.

The petitioner by means of this petition has assailed the government notification dated 21.07.2017 and the circulars dated 09.08.2017 and 10.08.2017 issued in pursuance of the above notification prescribing various

documents and the forms of the documents liable to be carried along with the goods in transit for a temporary phase till the E-Way bill system is developed and approved by the council.

The petitioner is not challenging the validity of any

provision of U.P. Goods and Services Tax Act, 2017

(hereinafter referred to as 'the Act') or the Rules framed

thereunder, namely, Section 165 of the Act or Rule 138 of

the Rules.

The submission of Sri N.C. Gupta, learned counsel for the

petitioner is that in view of Article 279A added to the

Constitution of India, a council has been constituted and

therefore, until and unless the council recommends the

documents and the format of the various forms, the State

Government has no authority or jurisdiction in law to

prescribe the documents to be carried with the goods in

transit or even the forms in which the said documents

should exist.

Section 165 of the Act empowers the government, i.e. the

State Government to make regulations consistent with the

Act and the Rules to carry out the provisions of the Act by

issuing a notification thereof.

Simultaneously, Rule 138 of the Rules provides that till

such time E-Way bill system is developed and approved

by the council, the Government may, by notification,

specify the documents that the person in charge of

conveyance carrying any consignment of goods shall

carry while the goods are in movement or transit storage.

The aforesaid Rule is clear and there is no ambiguity

therein. It provides that until and unless an E-Way bill

system is developed and approved by the council, the

Government of U.P. may prescribe the documents which

are supposed to be carried with the goods in movement

or in transit storage and this can be done by issuing a

notification.

The notification referred to Rule 138 of the Rules

aforesaid is distinct from the notification contemplated

under Section 165 of the Act.

The State Government in exercise of its power under Rule

138 of the Rules as the E-Way bill system has not been

developed and approved by the council for the interim

period has prescribed certain documents which are

supposed to be carried with the goods in movement or

transit storage. The prescription of such documents as

per the notification dated 21.07.2017 is not in

contravention of any provision of the Act or the Rules. It is

rather in consonance with Rule 138 of the Rules.

The next submission of Sri N.C. Gupta is that by the

circulars issued under the said notification, the existing

Form 38 and Form 21 prescribed under the U.P. VAT Act

have been made applicable for the purposes of

movement of goods.

The aforesaid notification has prescribed E-Way Bill 01,

E-Way Bill 02, E-Way Bill 03, etc. as the documents which

are to be carried along with the goods in movement or

transit storage.

The formats of Form 38 and Form 21 have been adopted

and prescribed as a format for E-Way Bill 01 and E-Way

Bill 02. This has been done and permitted as an interim

measure so that the trading activity and the transit of

goods may not be affected till E-Way bill system is

developed and approved by the council which is likely to

take some time.

In view of above, the prescription of the forms under the

impugned notification is only for temporary purpose and

the notification itself is for an interim period till E-Way bill

system is developed and approved by the council.

The notification as stated earlier is not in violation of any

statutory provision or Rule 138 of the Rules. The

challenge to the notification and the circulars therefore

has no merit.

The petition is devoid of merit and is accordingly

dismissed.

Order Date :- 24.8.2017

I. Batabyal