E-way bill compliance remains mandatory for machinery re-transported for testing despite the movement not constituting a taxable supply.

Re-transportation of machinery to a supplier for testing, without fresh consideration, does not constitute a taxable supply because it lacks a sale, transfer, or other specified transaction for consideration in the course or furtherance of business. Although goods moved for a purpose other than supply may be accompanied by a delivery challan, an e-way bill remains mandatory where no prescribed exemption applies. Failure to generate the required e-way bill therefore attracts penalty; the reduced penalty was sustained.

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Issues: Whether re-transportation of machinery for testing, without fresh consideration, constituted a taxable supply and whether the reduced penalty for transport without an e-way bill warranted interference.

Analysis: A supply requires a sale, transfer or other specified transaction for consideration in the course or furtherance of business. The re-transportation of machinery to the supplier for testing did not involve consideration and was therefore not a supply. Goods moved for reasons other than supply could be covered by a delivery challan, but the applicable rules still required generation of an e-way bill; the transaction did not fall within any exemption. The breach consequently attracted penalty, while the modification limiting the penalty was sustained.

Conclusion: The re-transportation was not a taxable supply, but failure to generate an e-way bill justified the reduced penalty; the decision is in favour of the assessee.

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