2020 (6) TMI 160 - HC - GST

Imposition of GST and penalty - transfer of goods - transfer of consignment only for demo approval - section 7 of IGST Act - Non-speaking order - HELD THAT - Since there was no taxable event, which had occurred, the question of having to pay the tax would not arise. Despite the fact that the said contention was raised by the petitioner, the respondent No.1 has failed to deal with the said contention. Moreover, the respondent No.1 has not even assigned any reason for ignoring the said contention. Therefore, the impugned order is clearly a non-speaking order, as the material contention has been totally ignored by the respondent No.1. Since the impugned order is a non-speaking one, this Court has no other option, except to set aside the said impugned order, and to remand the case back to the respondent No.1 with a direction to decide the issue - petition allowed by way of remand.

Summary

Issues:
Tax liability on goods sent for demonstration and evaluation, validity of penalty imposed.

Analysis:
The petitioner, a Private Limited Company engaged in manufacturing heavy equipment, challenged an order imposing tax liability and penalty for sending a machinery Excavator for demonstration. The petitioner contended that the transaction was not taxable under the Integrated Goods and Services Tax Act, as goods sent for demonstration are not covered under the Act. The petitioner argued that since the consignment was sent on a returnable basis for demonstration purposes, it should not attract tax. The respondent, however, argued that any transfer of goods falls under the definition of "supply" in the Act, making the petitioner liable to pay tax. The respondent justified the penalty imposed for alleged tax evasion.

The High Court observed that the petitioner had raised the issue of tax liability, contending that no taxable event had occurred, and thus, tax payment was not required. Despite this contention, the State Tax Officer failed to address or provide reasons for ignoring it in the impugned order. The Court deemed the order as non-speaking, as the crucial contention was disregarded. Consequently, the Court set aside the order and remanded the case back to the State Tax Officer, instructing him to allow both parties to present their arguments and pass a reasoned order within a month.

In conclusion, the High Court allowed the Writ Petition, emphasizing the importance of addressing all contentions raised by the parties and providing reasoned orders. The Court directed the State Tax Officer to reconsider the matter, ensuring both the petitioner and the Revenue Department have the opportunity to present their cases effectively. The judgment highlighted the necessity of a fair and thorough consideration of all arguments before reaching a decision in tax liability cases involving goods sent for demonstration purposes.