Instructions in light of Judgment of Honble Supreme Court on Sales Tax Incentive Scheme
September, 23rd 2014
F. No. 6/8/2014-CX.1
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
The Chief Commissioners of Central Excise (All)
Sub: Instructions in light of Judgment of Hon’ble Supreme Court on Sales Tax Incentive Scheme-reg.
Kind attention is invited to the judgment of Hon’ble Supreme Court in case of M/s Super Synotex India Ltd. [2014-TIOL-19-SC-CX] on the issue of abatement of sales tax under an abatement scheme where the assesse was allowed to retain 75% of the sales tax collected from the buyer and was required to deposit only the remaining 25% with the State Government. Under the circumstances, Hon’ble Court held that after 01.07.2000 i.e. under the transaction value regime, 75% of the sales tax retained by the assesse would form part of the assessable value, stating as follows in the paragraph 22,
“ The amount paid or payable to the State Government towards sales tax, VAT, etc. is excluded because it is not an amount paid to the manufacturer towards the price, but an amount paid or payable to the State Government for sale transaction, i.e. transfer of title from the manufacturer to a third party. Accordingly, the amount paid to the State Government is only excludible from the transaction value. What is not payable or to be paid as sales tax/VAT, should not be charged from the third customer/party but if it is charged and is not payable or paid, it is a part and should not be excluded from the transaction value. This is the position after the amendment, for as per the amended provisions the words “transaction value” mean payment made on actual basis or actually paid by the assesse. The words that gain significance are “actually paid”. ”
2) For further details the judgment may kindly be referred. This is an important judgment on the issue and may be brought to the notice of the trade and the assessing officers for finalisation of similar cases. Hindi version will follow. Difficulty, if any, in the implementation of the instruction may be brought to the notice of the Board.