TaxTMI 
TaxTMI 
2024 (12) TMI 731
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....ri R Subramanya Learned Counsel appeared for appeal Nos. E/11126/2017 & E/11172/2017 and Shri Ishan Bhatt, Learned Counsel appeared for appeal Nos. E/11311/2017, E/11370/2017. The appellants submit that the issue is no longer res-integra in the light of the following judgments:- • Pr. Commr of CGST & CE vs Mahindra Steel Service Centre Ltd (2014) 17 Centax 242 (S.C.) • Mahindra Steel Service Centre Ltd vs Pr. Commr of CGST & CE (2014) 17 Centax 241 (Tri-Delhi) • Harit Polytech Pvt Ltd vs Commr of CE & CGST (2023) 13 Centax 264 (Tri-Delhi) • Honda Motor Cycle & Scooters India Pvt Ltd vs Commr of CGST, Customs & CE 2020 (374) ELT 941 (Tri-Delhi) • Commr of CE, Mumbai-I vs Welspun Corp Ltd 2017 (5) TMI 177 - Cestat Mumbai • Commissioner of Central Goods and Service Tax, Customs and Central Excise Vs. Shree Cement Limited, Hon'ble Supreme Court's Order dated 08.08.2024. • CCE v. Welspun Corporation Ltd 2017 (358) ELT 630 (T)- Notice by the Hon'ble Supreme Court of India 2018 (360) ELT A 130 (S.C.) • PGP Glass Pvt. Ltd v. CCE 2023 (7) TMI 659-CESTAT • FCC Clutch I....
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....rat Value Added Tax Act, 2003, the scheme was defined as per Rules 18A, 18B, 18 C & 18D. The Respondent company opted for "Remission of Tax Scheme" and was thus eligible for the Capital subsidy in the form of remission of Sales Tax subject to the conditions to be fulfilled. After applying to the Commissioner of Sales Tax/VAT, the eligible units were issued entitlement certificate and Form 110 to make them entitle to the benefit of tax deferment or tax remission as the case may be. The subsidy in the form of remission of sales tax was in fact percentage of capital investment. The intention of the State Government was, thus, instead of granting the capital subsidy to the units setting up their manufacturing facility, the subsidy be granted by remitting sales tax amount. Separate assessment orders were thus issued by the assessing officer of the sales tax department from time to time towards the incentive scheme amount. The Competent Authority was required to necessarily pass order for remission of such tax separately for each tax period. The remission of tax is thus directly related to capital investment in fixed asset. There was no option to claim exemption from payment of sales tax....
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....rovision 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." In terms of above Section 4, the duty is chargeable on excisable goods on its value which is to be determined at the time and place of removal. Thus whatever transaction value of the goods prevailing at the time of its removal shall be liable to excise duty, which however shall not include the amount of duty of excise, sales tax and other taxes, if any, "actually paid" or "actually payable" on such goods. In the present case we find that the "sales tax" is "actually payable" to the Government at the time of removal of goods from the "place of removal". The liability to pay the sales tax/VAT is not extinguished at the time of removal of goods since it is not exempted from sales tax/VAT. It is only after the assessment of the sales tax officer and subject to the condition that the Respondent's liability to the Sales Tax is "remitted". Thus when the sales tax/VAT is payable at the....
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....supra) also would stand distinguished for the reason that in case of the appellants the amount of Sales Tax collected and allowed to be retained was deemed to be paid in view of the sub-section (7A) of Section 11 of the Gujarat Value Added Tax Act, 2003. 11.2. Even in the case of CCE, Jaipur v. Shree Rajasthan Syntex Ltd. - 2015 (31S) E.L.T. 626 (S.C.) the Hon'ble Supreme Court was seized of the Sales Tax Incentive Scheme, [1989] issued by the State of Rajasthan where full incidence of Sales Tax was allowed to be collected from the buyer, 75% thereof was retained by the respondent and the remaining 25% was paid to the State Government. Since the Incentive Scheme availed by the appellants was not of retention of sales tax but comprised of incentive equal to capital invested to be availed in any of 3 different ways as outlined at para 10.3 above. One of which i.e. its sub para (ii) is to avail incentive by way of remission of tax by retaining the amount of VAT collected and adjustment thereof as capital subsidy specified in the Eligibility Certificate equivalent to the capital investment made in fixed assets. This was further subject to the condition of re-investment of 50% ....
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....ted from their customers and refund granted on other two items (VAT on purchases and CST) is reimbursed by the Department of Industries to the Department of Sales Tax. Hence for the above reason also we find that such amount, allowed to be remitted to the respondents as incentive which was otherwise payable to the Sales Tax department, cannot form part of the transaction value. 5.7 The respondents have argued that in similar situation in case of manufacturers of fertilizers, where the subsidy was being received by such manufacturers from the Department of Fertilizers the C.B.E. & C. vide Circular No. 983/7/2014-CX., dated 10-7-2014 has clarified that subsidy is not any additional consideration flowing directly or indirectly from the buyer to the seller and hence, is not required to be included in the assessable value. Applying the same analogy to the facts of the present case and agreeing with the contentions of the respondents, we are of the view that since in the present case the remission is incentive for setting up the unit is Kutch area, the same would not form part of transaction value. 5.8 The Respondent has cited the order of Tribunal in case of CCE v. Utt....
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.... actually payable and paid which is allowed to be remitted by way of retention or by way of refund. In the instant case as already discussed above it is not that Sales Tax was not only payable but in fact it stood actually paid, as the remission was nothing but the incentive or capital subsidy which the State Government granted with respect to the investment made by the appellants in the earthquake ravaged region of Kutch of State of Gujarat. Instead of recovering Sales Tax and then refunding the same as capital subsidy, the State Government had remitted the same to appellants. Consequently like CST since VAT which was payable was actually paid the same is required to be excluded from the transaction value. Hence for this reason also the sales tax remitted by the Government towards incentive of Capital investment cannot be a part of the transaction value. 6. In view of our above observations, we hold that the impugned order requires no interference. Accordingly, we uphold the impugned Orders. The Revenue's appeals are dismissed. Cross-Objections and stay applications also stand disposed of." b) Similar issue has also been considered by this Tribunal in the case of PGP G....
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....se may be. The subsidy in the form of remission of sales tax was in fact percentage of capital investment. The intention of the State Government was, thus, instead of granting the capital subsidy to the units setting up their manufacturing facility, the subsidy be granted by remitting sales tax amount. Separate assessment orders were thus issued by the assessing officer of the sales tax department from time to time towards the incentive scheme amount. The Competent Authority was required to necessarily pass order for remission of such tax separately for each tax period. The remission of tax is thus directly related to capital investment in fixed asset. There was no option to claim exemption from payment of sales tax. The quantum of remission was based upon the investment made in the fixed assets. The condition of the remission amongst others included to remain in production, employment of certain percentage of persons in assessee unit, and numerous other conditions as brought out in Para 9 of the impugned Order-in-Appeal. 5. 2 The remission amount was adjusted against the incentive amount receivable as per the Eligibility Certificate. The Sales Tax assessment orders indica....
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....ansaction value of the goods prevailing at the time of its removal shall be liable to excise duty, which however shall not include the amount of duty of excise, sales tax and other taxes, if any, "actually paid" or "actually payable" on such goods. In the present case we find that the "sales tax" is "actually payable" to the Government at the time of removal of goods from the "place of removal". The liability to pay the sales tax/VAT is not extinguished at the time of removal of goods since it is not exempted from sales tax/VAT. It is only after the assessment of the sales tax officer and subject to the condition that the Respondent's liability to the Sales Tax is "remitted". Thus when the sales tax/VAT is payable at the time of removal in that case in terms of Section 4(d) of the Central Excise Act, the same is not includible in the transaction value. Further the sales tax amount was adjusted against the remission granted by the sales tax authority under an assessment. 5. 4 The learned AR during hearing has relied upon the judgment of Hon'ble Supreme Court in case of M/s Super Synotex (India) Ltd. - 2014 (301) E.L.T. 273 (S.C.). We find that in the impugned order the lear....
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....asthan where full incidence of Sales Tax was allowed to be collected from the buyer, 75% thereof was retained by the respondent and the remaining 25% was paid to the State Government. Since the Incentive Scheme availed by the appellants was not of retention of sales tax but comprised of incentive equal to capital invested to be availed in any of 3 different ways as outlined at para 10.3 above. One of which i.e. its sub para (ii) is to avail incentive by way of remission of tax by retaining the amount of VAT collected and adjustment thereof as capital subsidy specified in the Eligibility Certificate equivalent to the capital investment made in fixed assets. This was further subject to the condition of re-investment of 50% of total incentive i.e. (i) to (ii) of para 10.3 above and not only (ii) incentive received in projects in State of Gujarat within a period of 10 years of the commencement of production. This is thus not an exemption of tax as was the issue before the Hon'ble Supreme Court in the above case, I find that the ratio laid down in this judgement cannot have any bearing on the present case of the appellants. Since the incentive Scheme, 2001 for re-development of Kutch Ar....
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....turers of fertilizers, where the subsidy was being received by such manufacturers from the Department of Fertilizers the C.B.E. & C. vide Circular No. 983/7/2014-CX., dated 10-7-2014 has clarified that subsidy is not any additional consideration flowing directly or indirectly from the buyer to the seller and hence, is not required to be included in the assessable value. Applying the same analogy to the facts of the present case and agreeing with the contentions of the respondents, we are of the view that since in the present case the remission is incentive for setting up the unit is Kutch area, the same would not form part of transaction value. 5. 8 The Respondent has cited the order of Tribunal in case of CCE v. Uttam Galva Steels Ltd. 2015-TIOL-2242- CESTAT-MUM = 2016 (331) E.L.T. 261 (Tri.-Mum.). We find that the fact of that case is different from the facts in the present case, therefore, we do not incline to take any inference from the said decision of this Tribunal. 5. 9 We find that even sub-section (7A) of Section 11 of the Gujarat Value Added Tax Act, 2003 states that the tax that remitted is deemed to have been statutorily paid. The said provision is as ....