Summary
- The Karnataka High Court held on 25 June 2026 that a company does not incur GST liability when it returns machinery to a seller for testing without any fresh consideration, as the movement does not amount to a taxable “supply” under Section 7(1)(a) of the CGST/KGST Act. [livelawbiz.com]
- AAM India Manufacturing Corporation had purchased hydraulic fixtures and tooling machines, customised them, then sent them back to the supplier for testing via delivery challan without generating an e-way bill. Authorities intercepted the vehicle and demanded IGST plus penalty, which the Court rejected on the supply point. [livelawbiz.com]
- The Division Bench dismissed the State’s appeal and upheld reducing the penalty to Rs. 25,000, directing a refund of the balance. However, it clarified the company still breached e-way bill rules, attracting only the statutory non-compliance penalty — not GST on the movement. [livelawbiz.com]
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