Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ACCOUNTING STANDARDS :: VAT RATES :: Central Excise rule to resale the machines to a new company :: list of goods taxed at 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: TDS :: form 3cd :: empanelment :: cpt
 
 
Customs and Excise »
  Rate of exchange of conversion of the foreign currency with effect from 21st October, 2016
 Rate of exchange of conversion of the foreign currency with effect from 21st October, 2016
 Seeks to amend Notification No. 27/2014-Central Excise
 Government doubles limit of excise duty evasion for arrest and prosecution
 Excise duty evasion limit to warrant arrest revised to Rs 2 crore
 Guidelines for launching of prosecution in relation to offences punishable under the Customs Act, 1962
 GST notification triggers uncertainty over excise duty
 Preparing for GST: govt looking at restructuring excise/customs cadre
 Refund of Terminal Excise Duty (TED) under Deemed Exports where Duty has been paid from CENVAT Credit and ab-initio waiver is not available.
 CBEC directs customs officials for random search of vessels
 Rate of exchange of conversion of the foreign currency with effect from 7th July, 2016

Supreme Court's excise duty ruling throws automobile makers off gear
October, 22nd 2012

Makers of consumer goods looking to capture market share by pricing their products below cost may find their options limited by a recent Supreme Court judgement that allows the excise department to collect tax at the 'normal price' of the product, based on cost of production, even if the selling price is lower.

The judgment, which was delivered last month but whose ramifications are now becoming clear, directed Fiat and its erstwhile partner Premier Automobiles to cough up a total of Rs 360 crore for Fiat Uno vehicles that were sold below cost from 1996 to 2001.

The outcome of the order could potentially impact a range of sectors, from consumer goods to pharmaceutical and even the oil marketing companies besides automobiles.

Essentially, experts say, companies seeking to price below cost as a business strategy may no longer be able to do so. Further, companies may find it difficult to sell goods at a discount to clear unsold stocks if the excise department is aggressive in going after companies in the wake of the judgment. Also, the tax authorities may seek detailed information on the cost structure of their products.

Following this order, an emboldened excise department has sent out notices to 10-15 automotive companies, largely from Pune region, asking them to explain cost structure of its products.


Meanwhile, Premier Ltd has filed a review petition before the apex court and Fiat too will file for review petition shortly.

This judgment marks a significant departure from the way industry understands the transaction value based taxation system, say experts.

"This judgment has ramification which goes beyond the cases where goods are sold below cost," said Sachin Menon, partner - Indirect Taxes, KPMG, "Even the existing law allows discounts, known at the time of clearance of goods, as a deduction from the assessable value of the goods that are taxed for the purpose of excise. Now, even these can be questioned on the basis of the intangible mileage achieved by the seller in the market place. The Fiat judgment thus has an impact of unsettling the legal positions that is being followed by the trade, industry and the department over the past few decades," Menon added.

The Genesis of the conundrum

The Supreme Court ruled in favour of excise authority, as it found that Fiat's strategy to penetrate the market by selling below cost was resulting in an extra commercial consideration, and hence the price at which the product was being sold was not a normal price, as per section 4 of Excise Act prior to 2000.

As per the existing laws, the extra consideration needs to flow from the buyer to the seller, but after this ruling, any kind of consideration flowing to the seller from any source, can be taxed,

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Privacy Policy

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions