TaxTMI 
TaxTMI 
2025 (8) TMI 1827
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....13. At the time of setting up of the new plant at Narasapura, the Government of Karnataka has sanctioned certain special incentives and concessions i.e. (a) interest-free loan to the extent of 40% of eligible gross Value Added Tax (VAT) generated by the unit for 10 years to be repaid in 10 equal Annual instalments starting from 11th year and (b) reimbursement of CST for initial 5(five) years to the extent of 95% of Central Sales Tax (CST) collected from the company to M/s. Honda, Narasapura as per Government Order No. CI 155 SPI 2011, Bangalore dated 29-02-2012. Further, in respect of the CST reimbursement, another Government Order No. CI 16 SPI 2013, Bangalore dated 02.09.2013 was issued explaining the guidelines / procedures / formats. Accordingly, M/s. Honda, Narasapura were entitled to get interest free loan to the extent of 40% gross VAT and also to get reimbursement of 95% of the CST collected from the Company. Further, to get the above incentives, M/s. Honda, Narasapura has to make necessary applications to the Director of Industries and Commerce, Government of Karnataka along with all the required documents/details in proof of the transactions and VAT / CST payments. 3. ....
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....treated as tax not actually paid or actually payable for the only reason that it is being reimbursed to Honda in the form of subsidy / incentive as per the terms of the industrial policy? 3. I find that it is not the case of the Department that CST is not payable in the instant case. It is also an undisputed fact that the CST has been paid to the State Government. 4. Once the payability of the CST has not been questioned and the fact of payment of such CST is also not in dispute, then there is no warrant for inclusion of such CST payments in the transaction value (because transaction value, by its very definition does not include such CST payments). 5. As such, once CST is held to be payable and undisputedly found to be paid to the exchequer of the State Government, it cannot be said to be not payable and not paid for the only reason that the State Government has chosen to return the CST in the form of incentive /subsidy to Honda, in terms of the industrial policy in vogue." 6. Learned Counsel submitted that the present issue is no longer res integra and has been settled in the Respondent's own case in Honda Motorcycles and Scooters Pvt. Ltd. Vs. C....
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....e appellant was paying total VAT charged at applicable rates on sale of goods to the State Exchequer and was filing the VAT returns. The VAT 37B Challans, the appellant was utilising to discharge the output VAT liability for the subsequent period. The Department has treated the said discharge of VAT liability vide the said VAT Challans as retention of sales tax by the appellant holding same, while levying/ confirming the impugned demand to have been included in the transaction value. The authorities below have held that utilising the VAT Challans does not amounts to the actual payment. Accordingly, the value thereof is liable to be included in assessable value and is liable for the duty. 7. In view of these facts, we are of the opinion that appellant herein had opted for remission of tax scheme under which a portion of the VAT paid was remitted back to the appellant. It becomes clear that when the sales tax/ VAT is payable at the time of removal, in that case, in terms of Section 4(3)(d) of Central Excise Act, the same is not includable in transaction value. Tribunal Mumbai in the case of CCE, Mumbai Vs. M/s Welspun Corporation Ltd. 2017 TIOL 1287 (Tri. - Mum.) has held th....
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.... 10. We also draw our support from the case Shree Cement Ltd. Vs. C.C.E., Alwar 2018 (Vol-I) TMI 915-CESTAT-Mum wherein it was held that where assesses are required to remit the VAT recovered by them at the time of sale of goods manufacture and a part of such VAT is given back to them in the form of subsidy in VAT 37b Challans, such Challans are as good as cash but for the limited purpose of being used for the payment of VAT in the subsequent period. The Tribunal has clarified that in terms of the scheme of Government of Rajasthan payment of VAT using such Challans are the legal payments of tax. 11. Though Department has given much emphasis upon Super Synotex (supra) but we are of the opinion that the facts of present case are absolutely different from the said case in the terms that the Hon'ble Apex Court in the said case was dealing with sales tax incentive scheme. But in the present case, the issue is with respect to the grant of sales tax subsidy. In Super Synotex (supra) case, the assesse was retaining 75% of the sales tax collected from the customers whereas in the present case, the appellant had paid the entire amount of sales tax collected from the customers,....