Page 99 - GSTL_6th August 2020_Vol 39_Part 1

2020 ] SANY HEAVY INDUSTRY INDIA PVT. LTD. v. STATE TAX OFFICER, TELANGANA 25
loaded the single machinery Excavator Model SY750, and raised a “Returnable
Challan” on 22-1-2020 in favour of M/s. Madhura Engineering Services Private
Limited. The bill to ship was addressed to the Head Office of M/s. Madhura En-
gineering Services Private Limited at Hyderabad. Although the delivery was to
be made at Mancherial, but due to an inadvertent mistake, the address for deliv-
ery of the Excavator was shown as the Hyderabad address instead of the
Mancherial address. Moreover, according to the petitioner, the challan clearly
showed that the consignment was meant only for “demo approval”. Having
loaded the machine on two different vehicles due to the weight load, the ma-
chinery left Pune, and was scheduled to be delivered at Mancherial. However, as
there was the inadvertent mistake of showing the Hyderabad address, in the bill
of ship, the same mistake also occurred in the e-way bill. But, the driver was in-
structed to proceed to Mancherial, because the destination of the machine was
actually Mancherial. Further, according to the petitioner, on the night of 31-1-
2020, the consignment was intercepted by the respondent No. 1, the State Tax
Officer, who after checking the necessary papers, detained the consignment. The
respondent No. 1 issued the Form GST MOV-07 to the driver of the vehicle,
whereby the respondent demanded the IGST to the tune of Rs. 50,78,031/-, and
the penalty of an equal amount, thus totalling to Rs. 1,01,56,062/- on the value of
the consignment, which was declared to be Rs. 2,82,11,287/-.
3. Having received the said notice, the petitioner immediately sent a
reply on 5-2-2020 raising several objections to the notice. Moreover, without
prejudice, the petitioner submitted a bank guarantee drawn on ICICI Bank for an
amount of Rs. 1,01,56,062/-. In view of the bank guarantee, the petitioner’s goods
were released on 13-2-2020. But, the grievance of the petitioner is that without
considering the reply submitted by the petitioner, the respondent No. 1 has
passed the impugned order. Hence, this petition before this Court.
4. Mr. L. Ravi Chander, the Learned Senior Counsel, has raised the fol-
lowing contentions before this Court : firstly, the petitioner has raised a vital con-
tention before the respondent No. 1, namely that the transaction is not taxable
under the Integrated Goods and Services Tax Act, 2017 (for short, “the Act”). Ac-
cording to the Learned Senior Counsel, the levy and collection of tax is dealt with
in Chapter III of the said Act. Section 7 of the Act does not include any transac-
tion where the goods are being sent for the purpose of “demonstration”.
5. Secondly, according to the Frequently Asked Questions, which have
been answered by the Central Board of Indirect Taxes and Customs, the goods
sent on “a returnable basis” are not covered under the “supply of goods”. Since
the present consignment was sent on a returnable basis, as it was sent for the
purpose of merely demonstration, therefore, according to the answer given by
the Central Board of Indirect Taxes and Customs, the said goods were not taxa-
ble.
6. Thirdly, since the taxable event had not even occurred, the question
of the petitioner having to pay any tax on the “transfer of the goods” would not
even arise. However, despite the fact that the petitioner has raised the said con-
tentions, the respondent No. 1 has not even dealt with the said contentions in the
impugned order. Therefore, the impugned order deserves to be set aside.
7. On the other hand, Mr. Govind Reddy, the Learned Government
Pleader for Commercial Tax, submits that the nature of the transaction is abso-
lutely immaterial as far as Section 7 of the Act is concerned. In fact, Section 7 of
the Act defines the word “supply”. Since it is an inclusive definition, it is an ex-
GST LAW TIMES  6th August 2020  99