H Forms not received for excise duty

[Vasudev Mehta]

The company had sold perfumes to m/s a who in turn exported the perfumes. The perfumes also had component of excise duty embedded in it. The company received H forms for the whole amount except excise duty. The Officer wants to levy vat on the said excise duty since h forms are not received for that amount. Are there any judgements which said that if h forms are not receives for excise duty component still it will be considered as sales in course of export and no vat shall be levied. Can thw experts guide me on this?

[Amit Agrawal]

Article 286 of the Constitution of India, during VAT regime, reads as follows:

"(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place -

(a) outside the State; or

(b) in the course of the import of the goods into, or export of the goods out of, the territory of India."

[Amit Agrawal]

Kindly also take note of Supreme Court ruling in case of THE STATE OF TRAVANCORE-COCHIN AND OTHERS VERSUS THE BOMBAY COMPANY LTD., ALLEPPEY AND OTHERS, as reported in 1952 (10) TMI 28 - SUPREME COURT, wherein it was observed as follows:

".........................................

We are clearly of opinion that the sales here in question, which occasioned the export in each case, fall within the scope of the exemption under Article 286(1)(b). Such sales must of necessity be put through by transporting the goods by rail or ship or both out of the territory of India, that is to say, by employing the machinery of export. A sale by export thus involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea. Such a sale cannot be dissociated from the export without which it cannot be effectuated, and the sale and resultant export form parts of a single transaction. Of these two integrated activities, which together constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other. Assuming without deciding that the property in the goods in the present cases passed to the foreign buyers and the sales were thus completed within the State before the goods commenced their journey as found by the Sales Tax Authorities, the sales must, nevertheless, be regarded as having taken place in the course of the export and are, therefore, exempt under Article 286(1)(b). That clause, indeed, assumes that the sale has taken place within the limits of the State and exempts it if it takes place in the course of the export of the goods concerned.

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[Ganeshan Kalyani]

There cannot be tax on tax.

[Amit Agrawal]

Dear Shri Ganeshan Kalyani Ji,

Kindly elaborate your views (i.e. There cannot be tax on tax.) in the context of the query raised (i.e. demand of VAT against excise duty).

Thanks and regards

AI Summary

Sale in the course of export: VAT not leviable on embedded excise duty where the sale is an integrated export transaction.
Sales that form an integral part of an export transaction are exempt from state sales taxation when they occur in the course of export; accordingly, the excise-duty component embedded in exported goods should not attract VAT even if H forms for that excise element are not received, because the sale and export constitute a single integrated activity and taxation of the excise component would amount to tax on tax.