HIGH COURT FOR STATE OF TELANGANA HON BLE CHIEF JUSTICE SRI RAGHVENDRA SINGH CHAUHAN AND HON BLE SRI JUSTICE A. ABHISHEK REDDY WRIT PETITION No.5941 of 2020 18.03.2020 Between: Sany Heavy Industry India Private Limited. Petitioner and State Tax Officer, Peddapalli Circle, Karimnagar Division, Telangana, and others. Respondents Counsel for petitioner : Mr. L. Ravi Chander Senior Counsel for Mr. N. Ashwani Kumar Counsel for respondents: Mr. Govind Reddy GP for Commercial Tax Court made following: HCJ & AAR,J 2 W.P.No.5941 of 2020 ORDER: (Per Hon ble Chief Justice Sri Raghvendra Singh Chauhan) Aggrieved by order, dated 24.02.2020, passed by State Tax Officer, whereby Officer has not only imposed tax liability of Rs.50,78,031/-, but has also imposed penalty of same amount upon petitioner, petitioner has challenged said impugned order before this Court. brief facts of case are that petitioner is Private Limited Company registered under Companies Act, 1956, having its registered office in Pune. petitioner Company is engaged in business of manufacturing heavy equipments such as Hydraulic Excavators, Concrete Machinery, Mining Machinery, Crawler Excavator, Truck Crane, etc. According to petitioner, M/s. Madhura Engineering Services Private Limited entered into Machine Demo Activity Agreement (MDAA) on 21.01.2020 for sole purpose of demonstration and evaluation of Hydraulic Excavator for period of forty five days on returnable basis. According to Clause 3 of MDAA, place of delivery was to be Durga Constructions, C/o. Singareni Colleries Company Limited KKOCP Village Mandamarri, Dist. Mancherial, Telangana State . Furthermore, according to petitioner, in pursuance of MDAA, petitioner loaded single machinery Excavator Model SY750, and raised Returnable Challan on 22.01.2020 in favour of M/s. Madhura Engineering Services Private Limited. bill to ship was addressed to Head Office of M/s. Madhura Engineering Services Private Limited at Hyderabad. Although delivery was to be made at Mancherial, but due to inadvertent mistake, address for delivery of Excavator was shown as HCJ & AAR,J 3 W.P.No.5941 of 2020 Hyderabad address instead of Mancherial address. Moreover, according to petitioner, challan clearly showed that consignment was meant only for demo approval . Having loaded machine on two different vehicles due to weight load, machinery left Pune, and was scheduled to be delivered at Mancherial. However, as there was inadvertent mistake of showing Hyderabad address, in bill of ship, same mistake also occurred in e-way bill. But, driver was instructed to proceed to Mancherial, because destination of machine was actually Mancherial. Further, according to petitioner, on night of 31.01.2020, consignment was intercepted by respondent No.1, State Tax Officer, who after checking necessary papers, detained consignment. respondent No.1 issued Form GST MOV 07 to driver of vehicle, whereby respondent demanded IGST to tune of Rs.50,78,031/-, and penalty of equal amount, thus totalling to Rs.1,01,56,062/- on value of consignment, which was declared to be Rs.2,82,11,287/-. Having received said notice, petitioner immediately sent reply on 05.02.2020 raising several objections to notice. Moreover, without prejudice, petitioner submitted bank guarantee drawn on ICICI Bank for amount of Rs.1,01,56,062/-. In view of bank guarantee, petitioner s goods were released on 13.02.2020. But, grievance of petitioner is that without considering reply submitted by petitioner, respondent No.1 has passed impugned order. Hence, this petition before this Court. HCJ & AAR,J 4 W.P.No.5941 of 2020 Mr. L. Ravi Chander, learned Senior Counsel, has raised following contentions before this Court: firstly, petitioner has raised vital contention before respondent No.1, namely that transaction is not taxable under Integrated Goods and Services Tax Act, 2017 (for short, Act ). According to learned Senior Counsel, levy and collection of tax is dealt with in Chapter III of said Act. Section 7 of Act does not include any transaction where goods are being sent for purpose of demonstration . Secondly, according to Frequently Asked Questions, which have been answered by Central Board of Indirect Taxes and Customs, goods sent on returnable basis are not covered under supply of goods . Since present consignment was sent on returnable basis, as it was sent for purpose of merely demonstration, therefore, according to answer given by Central Board of Indirect Taxes and Customs, said goods were not taxable. Thirdly, since taxable event had not even occurred, question of petitioner having to pay any tax on transfer of goods would not even arise. However, despite fact that petitioner has raised said contentions, respondent No.1 has not even dealt with said contentions in impugned order. Therefore, impugned order deserves to be set aside. On other hand, Mr. Govind Reddy, learned Government Pleader for Commercial Tax, submits that nature of transaction is absolutely immaterial as far as Section 7 of Act is concerned. In fact, Section 7 of Act defines word supply . Since it is inclusive definition, it is exhaustive one. HCJ & AAR,J 5 W.P.No.5941 of 2020 According to definition, even transfer of goods is covered under said provision. Therefore, when movement of consignment begins its journey from point to point B, it is said to be transferred from consignor to consignee. Hence, whether goods were being sent for purpose of demonstration, or on returnable basis, is immaterial. Secondly, moment invoice is generated, tax liability arises automatically. In case goods were to be returned by consignee, consignor would be at liberty to claim adjustment in his future tax liabilities that will arise. However, consignor cannot escape liability to pay tax. Therefore, petitioner is liable to pay tax to Department. Since tax has been evaded by petitioner, Department was justified in imposing penalty of same amount. Hence, learned counsel has supported impugned order. Heard learned counsel for parties, perused impugned order, and considered record submitted by petitioner along with Writ Petition. bare perusal of impugned order clearly reveals that petitioner had, indeed, raised issue of tax liability on said transaction. According to petitioner, tax liability had not even arisen. Since there was no taxable event, which had occurred, question of having to pay tax would not arise. Despite fact that said contention was raised by petitioner, respondent No.1 has failed to deal with said contention. Moreover, respondent No.1 has not even assigned any reason for ignoring said contention. Therefore, HCJ & AAR,J 6 W.P.No.5941 of 2020 impugned order is clearly non-speaking order, as material contention has been totally ignored by respondent No.1. Since impugned order is non-speaking one, this Court has no other option, except to set aside said impugned order, and to remand case back to respondent No.1 with direction that he shall give both parties, petitioner as well as Revenue Department, ample opportunities to raise their contentions in their respective favour, and to pass reasoned order, within period of one month from date of receipt of certified copy of this order. Writ Petition is accordingly, hereby, allowed. miscellaneous petitions pending in this Writ Petition, if any, shall stand closed. There shall be no order as to costs. ______________________________ RAGHVENDRA SINGH CHAUHAN, CJ ______________________________ A. ABHISHEK REDDY, J 18.03.2020 vs Sany Heavy Industry India Private Limited v. State Tax Officer, Peddapalli Circle, Telangana