2020 (10) TMI 891 - Commissioner - GST

Detention of goods alongwith conveyance - supply or not - transfer of a going concern - detention of goods on the ground that E-way bill not produced - HELD THAT - Section 7 of the CGST Act, 2017 defines the Scope of Supply, Section 7 (1) provides that 'Supply' includes activities such as sale, transfer, barter, exchange etc. made for a consideration in the course or furtherance of business. This implies that the activity undertaken shall be an action which takes place in the course of regular conduct of business, such as sale or it should have the effect of furtherance of the business. Therefore, the activity to be called as supply should be such that undertaking that activity shall amount to conduct of business or enhancing 'the business. The transfer of a going concern, either as a whole or an independent part thereof, for a lump sum consideration does not constitute an activity taking place in the course of business or furtherance of business. If transfer of going concern is considered as a part of business then it is a supply. To determine this, Section 7 (1A) provides that where certain activities or transactions constitute a supply in accordance with the provisions of sub section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule-II. Such transfer of fixed assets namely old computer system, tube lights, fan etc from its Bagru branch to Bayana Branch through vehicle no. RJ 34 GA 0200 is considered as a supply of goods rather the Stock Transfer. Hence GST is applicable and E way Bill is mandatorily required as per above provisions. On being seen the document i.e. Delivery Challan, the appellant was carrying along with the vehicle/goods on which the taxable value as well as applicable tax was very much shown but no where it was mentioned the Stock Transfer of goods - Appeal dismissed.

Summary

Issues:
1. Whether the transfer of fixed assets from one branch to another constitutes a supply under the CGST Act, 2017.
2. Whether the imposition of tax and penalty for non-availability of E-way Bill on the transfer of fixed assets was justified.
3. Whether the penalty imposed on the transfer of used capital goods was lawful.
4. Whether the appeal filed against the impugned order should be accepted or rejected.

Issue 1: Transfer of Fixed Assets as Supply:
The appellant contended that the transfer of fixed assets from one branch to another was not a supply under the CGST Act, 2017. However, the Commissioner observed that Section 7 of the Act defines the Scope of Supply, including activities like sale, transfer, barter, or exchange. The transfer of business assets is considered a supply of goods as per Schedule II. Therefore, the transfer of fixed assets between branches constitutes a supply under the Act.

Issue 2: Imposition of Tax and Penalty for Non-Availability of E-way Bill:
The appellant argued that the imposition of tax and penalty for not having an E-way Bill on the transfer of fixed assets was unjustified. However, the Commissioner noted that under Section 68 of the CGST Act, a valid E-way Bill is required for the movement of goods exceeding a certain value. As the appellant failed to produce the E-way Bill during inspection, the imposition of tax and penalty was deemed appropriate under Sections 129 and 130 of the Act.

Issue 3: Lawfulness of Penalty on Transfer of Used Capital Goods:
The appellant challenged the penalty imposed on the transfer of used capital goods due to the absence of an E-way Bill. The Commissioner considered that the presence of a delivery challan showing taxable value and applicable tax indicated a supply of goods rather than a stock transfer. As per legal provisions, the transfer of fixed assets between branches constitutes a supply, making the penalty lawful.

Issue 4: Acceptance or Rejection of Appeal:
After reviewing the case records and submissions, the Commissioner found that the adjudicating authority correctly imposed tax and penalty on the transfer of fixed assets. Therefore, the appeal filed by the appellant was rejected based on the legal provisions and findings presented in the judgment.

This detailed analysis of the judgment addresses the key issues raised in the appeal regarding the transfer of fixed assets, imposition of tax and penalty, lawfulness of penalties, and the final decision on accepting or rejecting the appeal.