TaxTMI 
TaxTMI 
2026 (2) TMI 602
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....84 and washers, shims and lapping paste falling under Chapters 73, 68 of the First Schedule to the Central Excise Tariff Act, 1985. As a manufacturer of excisable goods, the appellants are duly registered with the department under Large Tax Payer Unit scheme vide Registration No. AAACM9840PXM005 and also discharge appropriate duty liability on removal of the said final products out of their factory premises. 2.2 In this case, the Government of Maharashtra had framed a Scheme, known as "Package Scheme of Incentives, 1993" (PSI), as a part of Industrial, Investment and Infrastructure Policy with objective of promoting fixed capital investment, employment generation and overall industrial growth in the State of Maharashtra, by issue of Government resolution No. IDL/1093(8889)/IND-8 dated 07.05.1993. Based on their application made to the State Government, the Secretary of Industries. Government of Maharashtra vide their letter dated 19.10.2005 granted the status of Mega Project on Capital Investment basis and offered certain incentives as a customized package approved by the State Government, in terms of Package Scheme of Incentives, 2001 (PSI). According to the said PSI scheme, el....
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....d Advocate appearing for the appellants submitted that as per Section 4(1)(a) of the Central Excise Act, 1944, the assessable value of the excisable goods for payment of Excise duty shall be the 'transaction value', where the goods are sold by the assessee for delivery at the time and place of removal, where the assessee and the buyer of goods are not related and where the price is the sole consideration for the sale. The term 'transaction value' has been defined under Section 4(3)(d) ibid and that provides for exclusion of sales tax actually paid or payable i.e., the amount of sales tax collected by manufacturer from buyer and which is actually paid or payable by such manufacturer. He further stated that in the present case, the appellants have actually paid the entire sales tax liability which was 'actually payable' to the State Government of Maharashtra after the specified periods. Hence, he claimed that the value on which Excise duty was paid by the appellants is correct, and the amount of sales tax incentives received after payment as required under PSI cannot form part of the transaction value, as the same is treated as deemed payment of sales tax. Therefore, he claimed that ....
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....whether the Sales Tax Incentives received by the appellants under PSI scheme is includable in the assessable value as per Section 4(1)(a) and Section 4(3)(d) of the Central Excise Act, 1944 read with Rule 6 of the Central Excise (Valuation) Rules, 2000 or otherwise? 7. We find that in terms of the legal provisions of Section 38 of the Bombay Sales Tax Act, 1959/ Section 94 of the Maharashtra Value Added Tax Act, 2002, it is provided that once the amount of sales tax required to be paid as per Package Scheme of incentives, irrespective of the receipt of PSI incentives, the entire sales tax amount had been deemed to have been paid. The said provision is as under:- "Section 38 - Payment of tax and deferred payment of tax, etc. (1) Tax shall be paid in the manner herein provided, and at such intervals as may be prescribed. (2) A Registered dealer furnishing returns as required by sub-section (1) of section 32, shall first pay into a Government treasury, in such manner and at such intervals as may be prescribed, the amount of tax due from him for the period covered by a return alongwith the amount of penalty or interest or both] payable by him under section....
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....e been granted by virtue of Eligibility Certificate, and where a loan liability equal to the amount of any such tax payable by such dealer has been raised by the SICOM or the Directorate of industries or the relevant Regional Development Corporation or the District Industries Centre Concerned then such tax shall be deemed in the public interest, to have been paid....." "Section 94 Deemed payment:- (1) Notwithstanding anything contained in this Act, rules or notifications, but subject to such conditions as the Commissioner may, by general or special order in the Official Gazette, specify, where a dealer to whom incentive by way of deferment of sales tax or purchase tax liability under any of the Package Schemes of Incentives designed by the State Government, have been granted by virtue of the Eligibility Certificate, and where a loan liability equal to the amount of any such tax payable by such dealer has been raised by the SICOM or the Directorate of Industries] or the relevant Regional Development Corporation or the District Industries Centre concerned or the, then such tax shall be deemed, in the public interest, to have been paid. (2) Notwithstanding a....
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....d other taxes. A lot of emphasis was given by the learned Commissioner (AR) that since in the Explanation, the words used are "actually paid" and not "actually paid or actually payable", so all that can be excluded is the amount actually paid. According to the learned Commissioner (AR), in view of the said Explanation, the words "actually payable" have to be read along with 'actually paid' and if the amount actually paid is less than the amount actually payable, then the exclusion can be 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 t....
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....er or class of dealers. It is clear from reading of Section 5(2) as also Section 41 of the Act that while Section 5 grants exemption from the levy/payment of sales tax, remission under Section 41 is granted in respect of any part of the tax payable by a dealer. In case of exemption no tax is actually paid or actually payable, whereas in the case of remission, tax is 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 ....
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....n. The decision of the Supreme Court in Super Synotex India would not be applicable to the facts of the present case as that was a case where 25% of the amount collected as sales tax from the customers was paid by the assessee and the remaining 75% of the amount was retained by the assessee, which amount was treated to be the price of the goods. In the promotion policy involved in the present case, the subsidy does not reduce the sales tax that is required to be paid by the assessee as the entire amount of sales tax collected by the assessee from the customer is paid. The subsidy amount, therefore, cannot be included in the transaction value for the purpose of levy of central excise duty under section 4 of the Excise Act." 12. The reference was, accordingly, answered holding that: "32. ** ** a- Subsidy under the promotion policy does not reduce the selling price; b- The amount of subsidy under the promotion policy is not an additional consideration; ** ** ** d- The subsidy amount under the promotion policy does not affect the selling price of the goods;" 13. In view of the aforesaid order, the contention of the learned ....