AI Drafter 
TaxTMI 
TaxTMI 
2015 (10) TMI 1727
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....he assessees are manufacturers of excisable goods which are being cleared on payment of duty under Section 4 of the Central Excise Act, 1944. All the five manufacturer-assessees availed sales tax incentive scheme known as Package Scheme of Incentives 1993 declared by Government of Maharashtra. The scheme is Sales Tax Incentives by way of Deferral. Under the said incentive scheme, the manufacturer-assessees are entitled to collect sales tax at the normal rate applicable to the goods manufactured from its customers and pay the same to the Sales Tax Authorities after a period of time say from 11th to 15th year in five equal instalments. Thus, though the manufacturer assessees collect the sales tax from their customers in a particular year, the payment of the same to the State Government is deferred. In the meantime, money so collected is used by the manufacturer assessees in their business. In November 2002, the Bombay Sales Tax Act, 1959 was amended so as to provide an optional scheme for payment of sales tax so deferred in advance on its net present value (NPV). Thus the said amendment in the Act provided an option to prematurely pay in place of the deferred tax amount, an amount eq....
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....med payment of Sales Tax; (ii) The demand is contrary to clarifications issued by the CBEC from time to time and the Hon'ble Commissioner has rightly dropped the same; (iii) Judgement of the Hon'ble Supreme Court in the case of Super Syncotex and Maruti Suzuki is not applicable to the facts of the present case; (iv) Demand is barred by limitation as the Respondent is not guilty of any fraud, wilful misstatement or suppression of fact with an intention to evade payment of duty. 5.1 On the first submission i.e. duty paid on correct transaction value, learned senior counsel submitted that for determining Transaction value, amount of sales tax actually paid or payable on the goods is not includable. It is not in dispute that sales tax actually payable is to be allowed as deduction under Section 4 of the Act. The amount of sales tax shown in the invoices raised on the customer is the amount actually payable and the same is not paid due to an incentive given by the State Government. Under the said Incentive Scheme, there is no exemption from payment of sales tax. By immediately paying the sales tax collected, on the NPV, the assessee is deemed to have paid the entire amount o....
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....ided by the State Government in the form of retention of sales tax by the manufacturers was considered by the CBEC in consultation with the Ministry of Law and vide Circular No. 378/11/98-CX dated 12/03/98 and it was clarified that sales tax is deductible from the wholesale price for determination of assessable value for levy of Central Excise Duty in the case of deferment of payment of sales tax for a particular period i.e. situation in present case. 5.3 Learned senior counsel further submitted that Section 4 of the Central Excise Act was amended w.e.f 1st July 2000. While interpreting the new Section 4, CBEC had issued instructions vide Circular No.354/81/00-TRU dated 30/06/2000 explaining the provisions of new Section 4 which would come into force from 01/07/2000. In the said instructions in Paras 10 & 11, it was clarified as follows: 10. As regards exclusion of taxes while working out assessable value, the definition of transaction value itself mentions that whatever amount is actually paid or actually payable to the Government or the relevant statutory authority by way of excise, sales tax and other taxes, such amount shall be excluded from the transaction value. I....
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.... sales tax is permitted to be abated while determining the assessable value, the deduction towards sales tax will be in respect of sales tax actually paid or actually payable at the time and place of removal of the goods. Learned senior counsel further submitted that the word payable means to be paid or liable to be paid as per ordinary dictionary meaning. Liable to be paid means liability in accordance with the law. Therefore, what is permissible to be abated in respect of sales tax is the sales tax, actually paid or actually payable in accordance with the law at the time of removal of the goods. Transaction value determined by the Respondent is therefore correct and proper in law as at the time of clearance of goods the sales tax was payable under the deferment scheme and the question of making payment of any differential duty does not arise. 5.6 Learned senior counsel further submitted that Section 43B of the Income Tax Act, 1961 allows deduction from full amount of sales tax and not for the amount of NPV paid. CBDT vide Circular No.496 dated 25.8.1987 clarified that if the Sales Tax Act provides that the sales tax deferred under the scheme shall be treated as actually paid, ....
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.... of the deferred tax. The respondent had actually collected the sales tax for paying it to the Government after a period as specified in the scheme. This amount had become actually payable after a specified term. However, due to the subsequent introduction of the provision for paying tax at NPV, the Respondent actually paid up the proportionate sales tax as per the NPV which would eventually sum up to become the actually payable amount of deferred sales tax as mentioned above. Since the scheme dealt with by the Hon'ble Supreme Court was different than the scheme availed by the Respondent, the judgment passed in the case of Super Synotex (supra) is not applicable to the facts of the present case. For similar reasons the judgment of the Hon'ble Supreme Court passed in the case of Maruti Suzuki India Limited (supra) cannot be made applicable to the facts of the present case. In Maruti Suzuki India Limited (supra) the Hon'ble Supreme Court dealt with the provisions of Haryana General Sales Tax Rules and held that the entitlement certificate granted to the assessee does not give any indication of deferment of Tax or capital subsidy and infact the same permitted the Assessee to retain th....
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....(1991) 4 SCC 139- Para 3, 39-42. 5.10 Learned senior counsel submitted that incentive granted to the respondent in the form of subsidy flowing from the State Government. The true intention behind introducing the Sales Tax Incentive Scheme is not grant exemption from payment of sales tax. By immediately paying sales tax collected, on the NPV, the assessee is deemed to have paid the entire amount of sales tax collected by it. The said amount is in a form of subsidy flowing from the State Government and not from the customers and as such the same is not includible in assessable value for the purpose of payment of excise duty. The judgement of the Hon'ble Supreme court in the case of Commissioner v. Mazagon Dock Ltd. 2005 (187) E.L.T. 3 (S.C.) 7 is applicable to the facts of the present case. Additional consideration should flow directly or indirectly from the buyer to the seller. The interest earned, on deferred sales tax, by the manufacturer is not a benefit extended by the buyer to the seller but is an incentive, accruing in pursuance of State Government policy. Therefore, this amount cannot be treated as additional consideration . 5.11 Learned senior counsel lastly submitted ....
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....that, there were number of judgments of the Tribunal in favour of the assessee. (vi) In any case, the whole issue is relating to interpretation of law and, therefore, extended period cannot be invoked. 7. Appeal No. E/85252/14 JSW Ispat Steel Ltd. Learned counsel, Shri Vipin Jain, appeared on behalf of the appellant and submitted that he is adopting all the arguments made by senior counsel, Shri V.S. Nankani, as also various arguments to be made by Shri V. Sridharan, learned senior counsel. In addition to these submissions, he made the following additional submissions:- (i) That the issue as to whether the sales tax which was collected under a deferral scheme which was to be paid after the expiry of a specified period could be excluded from the transaction value, has specifically been considered and dealt with by the Hon'ble Apex Court in the case of CCE v Maruti Udyog Ltd reported in 2014 (307) ELT 625 (SC). A perusal of the said decision would make it clear that even as per the Revenue, in a case of deferment, deduction was available in respect of the deferred sales tax from the transaction value. In support of the said contention, attention was drawn to t....
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....igious unit was to be taken by the High Powered Committee on the basis of various parameters. It further provided that a prestigious unit shall not, as a matter of right, be entitled to benefits available to other units. The Hon'ble Apex Court therefore held that since 50% of the sales tax collected was retained by Maruti and was not actually paid to the exchequer, nor was it actually payable since the High Powered Committed permitted the assesse to retain the said amount, it was not eligible for the deduction of the same from the transaction value. (ii) Learned counsel submitted that in para 26, the Apex Court observed as, - 26. The circular brought to the notice of all concerned that in view of the amended Section 4 of the Excise Act, any amount actually paid or actually payable by way of excise, sales tax and other taxes shall be excluded from the transaction value. It was made clear that if tax is paid at a concessional rate, that amount may be deducted from the transaction value. But, where the tax is not paid at the time of the transaction, but is paid subsequently, as for example, sales tax payable under a deferment scheme, then too the benefit of exclusion....
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....me, it was held that to the extent of sales tax collected by it which was neither paid nor was actually payable, the deduction of the same from the assessable value was not permissible. (iii) Learned counsel further submitted that the decision of the Apex Court in the case of CCE v Super Synotex reported at 2014 (301) ELT 273 (SC) and also that in the case of CCE v Shree Rajasthan Syntex reported at 2015-TIOL-49-SC, both dealt with Sales Tax incentives schemes of 1989 issued by the Government of Rajasthan. The said Scheme was operationalized vide Notification No. F. 4(35) FD/Gr. IV/87-38 dated 06.07.1989 which was issued under Section 4(2) of the Rajasthan Sales Tax Act, 1954, which provides that notwithstanding anything contained in the Act, where the State Government is of the opinion that it is necessary so to do in public interest, it may by Notification in the official gazette exempt, fully or partially, from the tax, the sale or purchase of any goods or class of goods or any person or class of person, without any condition or with such condition as may be specified in the Notification. The said incentive scheme was in the nature of an exemption from the levy of sales tax. ....
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....e context of the facts of that scheme as applicable in the State of Rajasthan and cannot be applied to a deferral scheme in which, sales tax on clearance of goods, though not actually paid at the time of such clearance, is actually payable, albeit on a future date. The definition of transaction value in Section 4 of the Central Excise Act, 1944 clearly provides for exclusion of the sales tax actually paid or actually payable from the transaction value. (viii) It was submitted that Section 94(2) of the MVAT Act, 2002 categorically provides for an option for premature payment of the deferred sales tax, by paying an amount equal to the NPV of the deferred tax, and that on making such payment the deferred tax shall be deemed in public interest to have been paid. It was submitted that not only was the amount of sales tax in respect of which deduction has been claimed actually payable, but also by virtue of Section 94(2) of the MVAT Act, 2002, it was also actually paid. (ix) It was further submitted that payment on the NPV basis did not have the effect of altering the actual sales tax payable, or for that matter what was actually paid, and that if the stand taken by the Revenue was....
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....yment on 15.7.2004 and the show cause notice has been issued on 10.6.2009. Thus the entire demand is beyond the normal period of limitation. It was also submitted that for raising of the demand, Explanation 1(b)(iii) to Section 11A is relevant and since in this case, the relevant date will be the date of payment i.e. 15.7.2004, hence the entire demand is beyond the normal period of limitation and on this ground also, the appeal is required to be allowed. It was further submitted that sales tax deemed to have been paid is to be excluded from the transaction value for the purpose of calculation of the central excise duty. Another submission was that the buyer and seller are not related. Therefore, this is not an additional consideration flowing from buyer to seller. The decision of the apex court in the case of Super Synotex (India) Ltd. (supra) is distinguishable from the facts of the present case. Learned counsel also referred to Section 43B of the Income Tax Act, 1961 and the position there. He also referred to the decision in the case of CIT vs. Suzler (India) Ltd. which has been upheld by the Hon'ble Bombay High Court. The Tribunal s decision in the case of Jayaswal Neco Industr....
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....09.1987 issued by the Central Government in the context of section 43B of Income Tax Act, 1961 cover the present dispute. (xi) There is no machinery in the Central Excise Act including Section 11A of the Central Excise Act, 1944 to cover situation of the present case. (xii) Relevant date cannot be calculated from date of NPV payment of sales tax. Proviso to Section 11A cannot apply in the present case. Future event of opting to pay as NPV method can never be relevant fact for the assessment of goods at the time of removal. Hence, non- intimation of the same to department cannot be called as suppression of the facts in order to invoke proviso to Section 11A of the Central Excise Act, 1944. (xiii) The principle of Res judicata shall not apply to the present matter. (xiv) Section 63 of the Contract Act 1872 - principle of accord and satisfaction - whole Debt stands discharged. If creditor accepts lesser sum of money from the debtor, debt payable to creditor continues to be same sum. Debt is not wiped out. It is only unenforceable. Provisions of Contract Act are in nature of general principles of law, hence the same will apply to all the taxing statu....
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....ollected by the assessee from the buyer excluding Sales tax and other taxes if actually paid shall be the price cum duty. The amount of Central Excise duty shall be arrived at from this amount only. Hence, Central Excise duty has to be levied on such amount of monies which are collected as sales tax but not actually paid. (iii) Clause (d) of Sub section (3) of Section 4 uses the expressions: -`price actually paid or payable -`any amount the buyer is liable to pay -`whether payable at the time of sale or at any other time - `any amount charged for or to make provision for -` actually paid or actually payable Learned Commissioner (AR) submitted that the legislature has while making inclusions in the concept of `transaction value included amounts which may not have been actually paid by the buyer to the assessee but while making exclusions therein only excluded ` amount of sales tax actually paid or actually payable . Hence, even in case taxes are payable at the time of removal of goods, deduction thereof from the transaction value is allowable only if: the amount payable by buyer as sales tax, or charged....
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....s Sales Tax to the Sales Tax Authority, the amount not so paid shall form part of the assessable value for the levy of Central Excise duty under Section 4. The arrangement between the Sales Tax Authority and the assessee by virtue of the `deeming proviso to the said Section 38 of the BST Act, 1959 (Section 94 of the MVAT Act 2002) or `accord and satisfaction of the these two parties for discharge of debt/fulfillment of promise as per the said Section 63 are not criteria relevant for arriving at the amount deductible as `tax actually paid or actually payable under Section 4 of the CEA 1944. (vii) Learned Commissioner (AR) further submitted that the Larger Bench of CESTAT has held in the case of Gopal Industries Ltd. Vs. CCE that meanings given to words and phrases used in the Income Tax Act and Sales Tax statutes are not applicable to Central Excise Law. The Supreme Court has in Mafatlal Industries Vs. UOI 1997 (89) ELT 247 (SC) at para 68 held that The Central Excise Act 1944 is a comprehensive, self contained statute and provides for levy, assessment and collection of tax and all ancillary provisions. The provisions of the Contract Act, 1872 and other general laws shall n....
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....he entire amount so collected is actually paid to the sales tax Authority. And in case it is not so paid, the contract is not satisfied and demand may be made of the Central Excise duty payable on such amount collected as tax and retained by the assessees. So also, the accounting of the Sales Tax authority of the sums due to it as tax from the assessee is of no relevance for the purpose of the said Section 4. All that is required to be seen is whether the full amount of money claimed as deduction on account of Sales Tax/VAT is actually paid tax or not. If not actually paid, it shall be part of transaction value. (x) The Supreme Court in its decision in the case of Super Syncotex at para 19 to 23 held that: ` On perusal of the assessment orders brought on record, it is quite clear that in pursuance of the Scheme 75% of the sales tax amount was credited to the account of the State Government as payment towards sales tax by the manufacturer. On a studied scrutiny of the scheme we have no scintilla of doubt that it is a pure and simple incentive scheme, regard being had to the language employed therein. In fact, by no stretch of imagination, it can be construed as a S....
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.... submitted that various courts have consistently held that the term `duty payable means the duty actually paid: UOI Vs Alembic Glass Industries 1992(61) ELT 193 (kar) TELCO 1990(48) ELT 182 (Bom)/1997 (94) ELT A141 (SC) Someshwar SSK Ltd. Vs UOI 1988 (34) E.L.T. 522 (Bom.) Pravara Pulp and Paper Mills 1997 (96) ELT 497 (SC) (Followed in Srichakra Tyres Ltd. Vs CCE 1999 (108)ELT 361 (T-LB)/2002(142)ELT A279(SC)) GTC Industries Ltd 2004 (164) ELT 230 (SC) ACCE Vs Bata India Ltd. 1996 (84) ELT 164 (SC) Orient Weaving Mills (P) Ltd. v. U.O.I. 1978 (2) E.L.T. (J 311) (S.C.) Orient Paper Mills Ltd. 1982 (10) E.L.T. 247(Del.) Orient Paper Millls Vs UOI 1997 (96) E.L.T. 15 (S.C.) CCE Vs Hindustan Pharmaceuticals Ltd. 2004 (167) E.L.T. 161 (Tri. - LB) (xii) Learned Commissioner (AR) quoted the following judgments to support his contention of actual payment. (1) Modipon Fiber Co. Vs. CCE 2007 (218) ELT 8(SC) (2) CCE Vs. Sujata Textile Mills Ltd. 2005 (181) ELT 379 (SC). (xiii) It has been submitted by the Appellant that in case the amount of Sales Tax is shown separat....
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....re ordinarily sold to the buyer. Learned Commissioner (AR) further submitted that reliance placed on the decision in Bata India Ltd Vs. State of Maharashtra (1983) 53STC 132 (Bom) is misplaced because the then definitions of `sale price and `turnover of sales in the BST Act, 1959 are limited and not similar to` transaction value . The judgment also turned on the reason that Sections 37,46 & 63 of the BST Act, 1959 would be rendered otiose in case it was held that the term `sale price included the sales Tax paid. In any case the said decision relies heavily on the decision in the case of Anand Swarup (supra). (xv) It is submitted by the Appellant in the case of Essel Propack that, deferred payment of Sales Tax is covered by the 3rd proviso to Sec 38 (4) of the BST Act, 1959 and repayment at NPV under the 4th proviso thereof. It was also emphasized that under the Package Scheme of Incentives, this deferred tax amount is converted to a loan liability and the tax is deemed to have been paid once such loan is raised by SICOM. The payment at NPV is the repayment of the loan and not of the deferred tax because the tax is already deemed to have been paid. It may be apprec....
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.... from the factory under an invoice as per the provisions of Rule 11 (2) of the CER 2002 which prescribes inter alia that value is to be mentioned. The value to be mentioned is the value as defined in Section 4 and duty is to be paid thereon. Only the amount of sales tax and other taxes actually paid at the time of removal is excludible from the price cum duty for arriving at the value. On each invoice the assessee has declared that they have paid or shall pay the amount collected as sales tax under such invoice to the sales tax authority. Even in cases where the Package Scheme of Incentives is mentioned, it is solemnly stated that they are availing of facility of deferred payment of sales tax. It has never been declared to the Department that they shall be retaining parts of the amount collected as sales tax and not paying the same to the sales tax authority. On the other hand they have willfully misstated that they shall pay the amounts collected as sales tax to the sales tax authority. In their periodical ER1 returns they have mentioned the `Value of goods after deducting the entire amount collected as sales tax/ not included the entire amount collected as sales tax. They have no....
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....03 issued from F No. V(55)15/5/Off/Acts-II/135/20/800-804 of the CCE Jaipur II was placed on record to support that facts are exactly same. This has been upheld by the Apex Court. (xxiii) Learned Commissioner (AR) submitted that in the impugned Appeals the facts are similar. The assessee has made a solemn declaration on the invoices issued under Rule 11 of the CER 2002 that the value is the correct and true value and that there is no additional consideration. The assessee has made a solemn declaration that the sales tax/VAT is paid or shall be paid. The assessee has in their ER1 Returns, submitted to the Department, declared as Value of clearances, an amount excluding the entire amount collected as Sales Tax, whereas they have not paid this entire amount to the Sales Tax Authority. Hence, there is wilfull misstatement of facts and suppression thereof with an intent to evade payment of duty. Hence, the extended period of limitation is invocable. (xxiv) In any case, the goods were self assessed to duty and cleared under Self Removal procedure. It was not mentioned on the ER 1 Returns that the assessee is collecting more Sales Tax than actually paid. At the time and ....
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....sel, Shri V.S. Nankani, has also submitted that even if it is presumed that the Hon'ble Supreme Court has disposed of the appeals of the Revenue relating to Kinetic Engineering Ltd. but that is only by way of remand and Tribunal has to decide it keeping in view principles laid down by Hon'ble Supreme Court. Moreover, since the Hon'ble Supreme Court s judgment is sub silentio on the issue involved in these appeals, the judgment of the Hon'ble Supreme Court will not be automatically applicable to the present set of appeals. 14. We have gone through the judgment of the Hon'ble Supreme Court in the case of Super Synotex. A perusal of the order would indicate that what was being considered by the Hon'ble Supreme Court was that when a part of the sales tax collected which was permitted to be retained by the manufacturer will form part of the transaction value for determination of excise duty or not. Thus the issue was that the law permits Rs. 100/- to be collected as sales tax which was collected by the manufacturer but law also provided that Rs. 75/- will be retained by the manufacturer and only Rs. 25/- will be paid to the Government. The question was whether Rs. 75/- will form part....
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....ly as that of Super Synotex and was again pertaining to the scheme under Rajasthan Sales Tax Act and the same scheme as discussed in the case of Super Synotex and therefore Hon'ble Supreme Court has followed the judgment of Super Synotex. Another case cited is that of Maruti Suzuki. We find that in this case scheme is under Haryana Sales Tax Act and the scheme is different from the scheme of Super Synotex or the deferral scheme which is the subject matter of the present set of appeals. In the case of Maruti Suzuki, the manufacturer assessee was permitted under the law to collect the normal sales tax applicable on the vehicles manufactured by it but was allowed to retain the sales tax amount upto a specified value and within a specified period. Here, therefore, the question was when the appellant has collected certain amount as sales tax but was not required to pay the same to the Government due to incentive scheme pertaining to the prestigious units, whether or not would be excluded for computing the transaction value for excise duty purpose. Here again, the Hon'ble Supreme Court has taken the view that it is not the sales tax collected that is excludible but it is the sales tax ac....
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....solate from it the ratio decidendy. According to the well settled theory of precedents, every decision contains three basic postulates- (i) findings of material facts, direct and inferential. An inferential finding of fact is the inference which the Judge draws from the direct or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of the above. A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in the judgment. Every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which may be found there, is not intended to be exposition of whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. 21. Therefore, in order to understand and appreciate the binding force of a decision it is always necessary to see what were the facts in the case in which the decision was given and ....
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....ntext in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. v. Horton (1951 AC 737 at p. 761), Lord Mac Dermot observed : The matter cannot, of course, be settled merely by treating the ipsissima vertra of Willes, J as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished judge. 12. In Home Office v. Dorset Yacht Co. [1970 (2) All ER 294] Lord Reid said, Lord Atkin s speech is not to be treated as if it was a statute definition. It will require qualification in new circumstances. Megarry, J in (1971) 1 WLR 1062 observed: One must not, of course, construe even a reserved judgment of Russell L.J. as if....
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....an. 18. One of the submissions made by the learned senior counsel, Shri V. Sridharan, is that the Explanation to Section 4(1) of the Central Excise Act, 1944 which was inserted by Finance Act, 2003, has no bearing on the issue involved in the present matter. During the hearing, learned senior counsel took pain to explain about the situation what was happening before the said Explanation was inserted. In nutshell, there were differing decisions of various courts relating to cum duty price and in order to sort out the matter, the said Explanation was inserted. It was the contention of the learned senior counsel that this Explanation had no application as far as deductibility or includibility of excise duty or sales tax in the value is concerned. On the other hand, learned Commissioner (AR) argued that this Explanation very clearly provides that all that can be excluded is sales tax, if any, actually paid. If the sales tax collected is more than actually paid, then the same will form part of the price cum duty and the value and duty liability will have to be computed based upon the Explanation. 18.1 We have given considerable thought to the propositions made by both the sides. T....
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....Excise Act in 1944 and Section 4 as amended by Finance Act, 1955 did not provide for exclusion of sales tax. Still the Board clarified that no excise duty is payable on sales tax element. We are not able to appreciate how the above position helps the cause of the assessees. Even now it is not as if the sales tax is required to be included for assessment of value and hence duty liability. All that is being said (and which is matter of dispute) is the sales tax and other taxes actually paid or payable are only required to be excluded and not any amount purported to be sales tax. Further, since the new Section 4 specifically provides for exclusion of sales tax actually paid or actually payable, no other interpretation can be taken. Even earlier circular nowhere provided that if a manufacturer is collecting Rs. 100/- in the name of sales tax as against Rs. 60/- actually leviable or to be paid to the Sales Tax Department, then reduction will be Rs. 100/-. In nutshell, we do not find this contention of the learned senior counsel helps in resolving the issue or the cause of the appellant. 20. Another submission of the learned senior counsel is that the assessee has shown and collected ....
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.... the sales tax which has been paid to the State Government can be excluded from the assessable value. We also note that the learned senior counsel also has submitted that where relevant taxing statute permits seller to collect tax from purchaser, the amount so collected is not a part of price as held by the Hon'ble Supreme Court in the case of Joint Commissioner of Sales Tax reported in 1975 (36) STC 188 (SC). It is also submitted that the same principle has been followed in the case of Anand Swarup vs. CST reported in 1980 SCC 451. Learned AR, on the other hand, has argued how and why these judgments are not applicable. We have gone through these judgments. These are for purpose of computing value for sales tax purpose or turnover for sale tax or turnover tax and are with reference to those Acts. We note that the question here is the value for purpose of excise when the sales tax collected from the purchaser is higher than what has been paid to the Sales Tax authority and in view of the very clear definition of the same under Section 4 of the Central Excise Act, only the sales tax which is actually paid or payable to the Sales Tax Authority/State Government can be excluded. It is ....
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....hority to make such a claim. In fact the transaction value as defined in the Act includes the price actually paid or payable for the goods when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to or on behalf of the assessee by reason of, or in connection with the sale, whether payable at the time of sale or at any other time including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing or selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. If in the definition of the transaction value, the words if any, actually paid or actually payable on such goods were not there, then perhaps the learned senior counsel s submission would have some weight but once the definition provides exclusion of only actually paid or payable, the argument of the learned senior counsel holds no water. We accordingly reject it. 22. Another submission made by the learned senior counsel is that the benefit gr....
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....d that if the creditor accepts lesser sum of money from the debtor, debt payable continues to be the same. Debt is not wiped out. It is only unenforceable. These pleas are relevant between the creditor and debtor. Section 63 of the Contracts Act is also in the same context. These submissions are not relevant for determining the sales tax actually paid or actually payable and thereafter determining the transaction value and thereafter duty liability under the Central Excise Act. We agree with the submissions of the learned Commissioner (AR) in this context, particularly para 10(v), 10(vi), 10(vii) and 10(ix). Contention of the learned senior counsel is therefore rejected. 26. Another submission of the learned senior counsel was that disintegration of the definition of the transaction value into various portions will show that the entire definition including the last lag, deals with money flowing from buyer to seller only. We have gone through the definition of the transaction value. While it is true that the said definition including the last lag deals with money flowing from buyer to seller but this includes all taxes such as excise, sales tax and other taxes and the said defini....
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....apply to all the taxing statute. We are not impressed with such a proposition. The general principles of law may be taken help only when a specific law is silent on the issue. When things are specific in a particular law and certain things have to be done in a specified manner, the general law is irrelevant. Contention is therefore rejected. 31. Now we proceed to examine the issue with reference to Section 4. Section 4 of the Central Excise Act, 1944 as it stood before 1.7.2000 read as under:- Valuation of excisable goods for purposes of charging of duty of excise.- 1. Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value, shall, subject to the other provisions of this section, be deemed to be- (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale: Provided that (i) where, in accordance with the normal practice of the wholesale trade in such go....
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....tion 3. 4. For the purposes of this section, (a) "assessee" means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) "place of removal" means- (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory and, from where such goods are removed; (ba) "time of removal", in respect of goods removed from the place of removal referred to in sub-clause (iii) of clause (b), shall be deemed to be the time at which such goods are cleared from the factory; (c) "related person" means a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub-distributor of such distributor.....
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....Section 4 of the Central Excise Act, 1944 underwent a major change inasmuch as instead of concept of the normal value of the goods, the concept of transaction value was introduced. The relevant portions of the new Section 4 are as under:- Valuation of excisable goods for purposes of charging of duty of excise. - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall - (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. Explanation. - For the removal of doubts, it is hereby declared that the price-cum-duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing directly or indirectly from the buyer....
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....d for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. 33. The Section 4 mentioned above is for the period prior to 1.7.2000 as also w.e.f. 1.7.2000 as in the appeals before us, in some cases demands are pertaining to period beginning prior to 1.7.2000 and in other cases after 1.7.2000. 34. From the above definition of value it is seen that the concept of time and place of removal has always (i.e. before 1.7.2000 and from 1.7.2000) been an integral part of the definition for computation of the value of the goods. As per old Section 4, normal value has to be determined for delivery at the time and place of removal and as per new Section 4, the transaction value has to be determined for delivery at the time and place of removal. 35. As per old Section 4, normal value was defined under Section 4(4)(d)(ii) and excluded sales tax payable. The transaction value has been defined in new Section 4(3)(d) to mean the price a....
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....he learned counsel for the assessee has argued must necessarily be accepted inasmuch as cash discount is something which is known at or prior to the clearance of the goods, being contained in the agreement of sale between the assessee and its buyers, and must therefore be deducted from the sale price in order to arrive at the value of excisable goods at the time of removal . 23. It only remains to discuss the sheet anchor of revenue s case, namely, the judgment of this Court in Commissioner of Central Excise, Jaipur-II v. Super Synotex (India) Ltd. and Ors. (supra). The said judgment was concerned with sales tax incentives that were given under the Rajasthan Sales Tax Incentives Scheme. On the facts of that case, 25% of the sales tax was paid to the Government, and 75% of the said amount of sales tax was retained by the assessee and became the assessee s profit. Under the earlier Board s circulars that were issued by the Central Board of Excise and Customs, the amount of 75% of sales tax that was never paid to the Government but retained by the assessee was also liable to be deducted from price under the old Section 4, that is, Section 4 before its amendment in the year 20....
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....e mean payment made on actual basis or actually paid by the assessee. The words that gain signification are actually paid . The situation after 1-7-2000 does not cover a situation which was covered under the circular dated 12-3-1998. Be that as it may, the clear legislative intent, as it seems to us, is on actually paid . The question of actually payable does not arise in this case. (at para 22) 24. It will be noticed that this Court did not deal with Section 4(1)(a) as amended in the year 2000 insofar as it speaks of delivery of goods at the time and place of removal. This Court was only concerned with whether sales tax is to be deducted from transaction value as newly defined. We have already seen that transaction value specifically states that it will not include sales tax actually paid or actually payable on such goods . On the facts of that case, this Court was not concerned with the expression actually payable as it did not arise in that case. This Court was only concerned with sales tax not actually paid to the Rajasthan Government, and therefore held that since 75% of sales tax was retained by the assessee, the said amount could not be deducted as only amounts paya....
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....ion value, actually paid is not relevant in the present set of appeals. What is relevant is actually payable . Actually payable at the time of clearance is the deferral sales tax. Thus, in our view, the amount of deferral sales tax will require to be excluded. 38. Now we examine what is the Board s understanding about the treatment of deferment of sales tax. The Central Board of Customs and Excise vide circular No. 378/11/98-CX dated 12.3.1998, has examined the issue with reference to the old Section 4 and observed as under:- Subject: Determination of assessable value for levy of excise duty where an incentive is provided by the State Govt. in the form of retention of Sales-tax by the manufacturers - Regarding. The undersigned is directed to refer to Board s Circular No. 4/85 (F.No. 6/ 15/85-CX.I), dated 14-3-1985 regarding addition and exclusion of Sales-tax in the assessable value. The trade has raised a doubt about the deductions given in respect of sales tax leviable by State Government, while determining the Assessable value. The following three situations arise as a result of incentive schemes formulated by some of the State Governments for ensuring rapid industriali....
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....all be excluded from the transaction value. In other words, if any excise duty or other tax is paid at a concessional rate for a particular transaction, the amount of excise duty or tax actually paid at the concesssional rate shall only be allowed to be deducted from price. The assessee cannot claim that the excise duty or tax payable at the "normal rate" should be allowed to be deducted. The words "actually paid" have, therefore, been used to the definition of transaction value to reflect the legislative intention as explained above. 11. The words "actually payable" in the context of the amount of duty of excise, sales tax and other taxes would normally come into play only in those situations where the amount of excise, sales tax or other taxes is not paid at the time of transaction but paid subsequently, for example, sales tax payable under a deferment scheme. It will be seen that in para 11, the Board has observed that the words actually payable in the context of the amount of duty of excise, sales tax and other taxes would normally come into play only on those situations where the amount of excise, sales tax or other taxes is not paid at the time of transactio....
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....table Trade Notice may be issued for the benefit of the Trade. (6) Hindi version will follow. (7) Receipt of these instructions may be acknowledged. Thus Board was of the view that interest earned cannot be added to the assessable value in such facts and circumstances both under Valuation Rules, 1975 or Valuation Rules, 2000 i.e. under old Section 4 or new Section 4. 38.3 It would thus be seen from the above three circulars that the Board has all along been of the view that under the deferment scheme of sales tax, the sales tax is payable though after a long period of time and since the sales tax is payable, the same will stand excluded from the normal value or the transaction value. 39. The only issue in the present case is that the manufacturer assessees have availed the 4th proviso to Section 38 of the Bombay Sales Tax Act, 1959 or the corresponding section of the Maharashtra Value Added Tax Act, 2002 and instead of paying the amount on the deferred dates, they have paid the amount on an earlier date and the amount paid was based upon the net present value of the amount actually payable on the due date. The 4th proviso to Section 38 of the Bombay....
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.... only of the amount actually paid. In the facts of the present cases, the amount actually paid is far less than the amount actually payable at the time of clearance. We are not impressed with the said argument of the learned Commissioner (AR). The definition of transaction value given in Section 4(3)(d) very clearly stipulates exclusion of the amount of sales tax and other taxes actually paid or actually payable on such goods. In the present cases, the goods were cleared excluding the amount of sales tax actually payable. This amount has not been changed by the Sales Tax Authority. All that has been done is the manufacturer-assessees were given an option to make pre-payment of the deferred sales tax based on the Net Present Value. Thus, though the Net Present Value may be less than the actually payable amount but the fact remains the timings have changed. The difference between the amount actually paid and actually payable has arisen due to the time when the amount was paid and originally stipulated date of payment under the deferral scheme. As discussed earlier, the concept of actually paid or actually payable is to be determined at the time of removal. Thus the amount actually pa....
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....Court in Income Tax Appeal No.450 of 2013. We have gone through the said section as also the various submissions. Section 43B of the Income Tax Act, 1961 allows the deduction of taxes paid in a particular year only if taxes are actually paid in that year. The question was whether the taxes under the deferral scheme are to be considered as actually paid in the year when these are deferred or should be considered as paid when they are actually paid in the year of deferral for purpose of computation of the income. The two circulars referred by the senior counsel are in that context. Further, the issue before the Income Tax Appellate Tribunal as also the Hon'ble Bombay High Court in the case of Sulzer India Ltd. vs. Joint CIT was whether to consider the difference between the differential tax payable and the net present value actually paid as revenue receipt or capital receipt in the year of actual payment. Obviously the issue before the Income Tax Appellate Tribunal and the Hon'ble Bombay High Court was very different and not relevant for our purpose. Even the two circulars of the CBDT are in a different context and are for a different Act, and in Section 4 of Central Excise Act, 1944....
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....n 43B to the sales tax collected but not actually paid under deferral schemes of the State Governments was considered in Board s Circular No. 496, dated 25-9-1987 [Clarification 2], and it was decided that, where the State Governments make an amendment in the Sales-tax Act to the effect that the sales tax deferred under the scheme shall be treated as actually paid, the statutory liability shall be treated as discharged for the purposes of section 43B. 2. It has since been brought to the notice of the Board that some State Governments, instead of amending the Sales-tax Act, have issued Government Orders notifying schemes under which sales tax is deemed to have been actually collected and disbursed as loans. Such Government Orders also provide that entries shall be made in the Government accounts giving effect to deemed collections by crediting the appropriate receipt-heads relating to sales-tax collections and debiting the heads relating to disbursal of loans. It has, therefore, been represented that, as such conversion of the sales tax liability into loans have similar statutory effect as can be achieved through amendments of the Sales-tax Act, the amounts covered under th....
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....f clearance for purpose of determination of transaction value under the Central Excise Act. In the absence of such provisions in law, NPV at the time of clearance cannot be taken. In any case the notices in the present appeals do not propose any such demand. What is proposed is to consider the deferred amount of tax minus actual NPV paid as part of assessable value and duty liability on such an amount. 44. In some of the appeals, the period involved is prior to 1.7.2000. Prior to 1.7.2000, the law did not stipulate exclusion of the amount actually paid or actually payable but stipulated the sales tax payable. Thus prior to 1.7.2000, in any case, the demands will not be sustainable. In view of the above position, in our considered view, the transaction values determined by the manufacturer assessees are in order. 45. In addition to the issue on merits, issue relating to limitation has also been raised. Learned counsels for the respondent-assessees have pleaded that since the issue on limitation was not decided by the Commissioner, even though the same was raised in the show cause notice, the matter must go back to the Commissioner for deciding the issue on limitation in case t....