2017 (10) TMI 838 - AT - Central Excise

Valuation - includibility - appellant under sales tax holiday vide notification 15/74 - Department was of the view that the amount received as sales tax from customers and not remitted to the government is an additional consideration and the same is liable to be included in the assessable value - Held that - the appellant has disclosed the collection of amount in the sales tax return. The assessment order also observes that appellant was given time to produce C Form - If the said amount is assessed by sales tax authorities then the same cannot be considered as additional consideration so as to be included in the assessable value. For verifying these aspects the matter requires to be remanded to the adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
- Whether the amount collected by the appellants in addition to the charged amount from buyers, reflected as sales tax in annual returns, is liable to be included in the assessable value.
- Whether the appellant, under a sales tax holiday, was justified in collecting 10% Central sales tax as an interest-free deposit from customers who did not produce required forms.
- Whether the appellant's practice of refunding the collected amount upon production of the necessary form or depositing it with the sales tax authorities was in compliance with the law.
- Whether the authorities erred in confirming the demand raised by the department without considering the appellant's explanations and evidence.

Analysis:
1. The appellants, engaged in manufacturing Diesel Generating Sets, collected additional amounts from buyers, reflecting them as sales tax in their records. The department contended that failure to remit this amount to the government constituted additional consideration, leading to a demand of ?2,05,212/-, upheld by the original authority and the Commissioner (Appeals).

2. The appellant argued that being under a sales tax holiday as per a government notification, the demand was unjustified. They explained that due to an amendment in the Central sales tax Act in 2002, they collected 10% Central sales tax as a deposit from customers without the required forms, refunding it upon form submission or depositing it with the authorities.

3. The appellant maintained that all amounts collected were duly disclosed in their accounts, balance sheets, and sales tax returns. They emphasized that the practice was a precautionary measure to comply with the law and safeguard both their interests and revenue, contrary to the authorities' allegations of evasion.

4. The department argued that failure to remit collected Central sales tax amounted to additional consideration, citing relevant judgments. However, the Bench found merit in the appellant's contentions, noting that the amount was disclosed, and the matter required verification by the adjudicating authority.

5. Ultimately, the Bench set aside the impugned order and remanded the matter to the adjudicating authority for further examination, emphasizing the need to verify whether the collected amount had been assessed by the sales tax authorities or fell under their supervision. The decision allowed the appeal by way of remand, keeping all issues open for reconsideration.