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TMI Blog2010 (7) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... F.M. IBRAHIM KALIFULLA J. This writ petition is directed against the order of the third respondent-Tribunal dated October 3, 2005 passed in S.T.A. No. 215 of 2000. The petitioner seeks to set aside the said order of the Tribunal. The brief facts, which are required to be stated are that the petitioner is engaged in the manufacture of industrial valves. The goods manufactured by the petitioner are subjected to duty of excise under the Central Excise Act, 1944. The assessment pertains to the year 1990-91 and the issue concerned is the levy of tax under the Central Sales Tax Act (hereinafter called as the Act ). According to the petitioner, the Government of India provided a scheme of cash assistance/refund of excise duty to the manufacturer effecting sales and supply to certain specified projects to which deemed export status was extended under the Import and Export Policy of the Government of India. The petitioner stated to have secured a contract of M/s. Oil India Limited vide order No. 130299/DJA, dated February 22, 1990, which was entitled for deemed export benefit status. Under the said contract in clause 4.0 under the heading duties and taxes , it was specifically ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. The learned counsel for the petitioner contended that except for export sales, since there is no provision for grant of exemption under the Central Excise Act, while at the same time in public interest, the Government of India came forward to grant deemed export status and thereby provided for payment of cash assistance to meet whatever Central excise duty borne by the petitioner and when such payment of Central excise duty did not form part of the sale value under the contract between the petitioner and M/s. Oil India Limited, the cash assistance made by the Government of India cannot be taxed under the Act. The learned counsel placed reliance upon the decisions in Neyveli Lignite Corporation Ltd. v. Commercial Tax Officer, Cuddalore reported in [2001] 124 STC 586 (SC) and Indian Potash Limited v. Assistant Commissioner (CT) [2002] 128 STC 446 (Mad) which followed the decision Neyveli Lignite Corporation Ltd. v. Commercial Tax Officer reported in [2001] 124 STC 586 (SC) in support of his submissions. As against the abovesaid submission, Mr. Naziruddin, learned Special Government Pleader (Taxes), in his submissions contended that under clause 4.0 of the purchase order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f cash assistance for sales effected for certain specified projects. Under the said scheme, while the supplier to such specified parties had to bear the Central excise duty and to the extent to which such duties are borne by the supplier, cash assistance is paid later on based on the claim by such suppliers. The most significant factor is that such a benefit by way of cash assistance to off-set whatever Central excise duty paid by the supplier was an exclusive arrangement between the Government of India and the supplier for certain specified reasons. The said arrangement and the benefit extended by way of cash assistance had no effect on the sale effected as between the petitioner and its buyer, viz., Oil India Limited. It is not as if that in the event of failure in getting reimbursement of the Central excise duty in the form of cash assistance, the buyer, viz., Oil India Limited would have made good the loss to the petitioner. In other words, by virtue of the categoric terms contained in the purchase order, the petitioner agreed to supply goods to its purchaser, viz., M/s. Oil India Limited by agreeing to bear the Central excise duty payable on such supplies. In order to ensur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1932, provides that the price in a contract of sale may be fixed by the contract, or may be left to be fixed in manner thereby agreed, or may be determined by the course of dealing between the parties. In cases where the price is not determined in accordance with these provisions, the buyer shall pay the seller a reasonable price. Therefore, price is an essential element of a contract of sale and is ordinarily a matter of agreement between the parties. What the purchaser of the fertiliser bargains when he purchases fertiliser from the petitioners is to obtain a certain quantity of fertilisers at a certain price which shall not exceed the price fixed by the Central Government by notification under the Fertilizer (Control) Order. The sale is not conditional on the Central Government paying any amount by way of subsidy. There is no agreement between the parties for any further amount to be paid, than what is paid by the purchaser at the time of the sale. Turnover is defined in section 2(xxvii) of the KGST Act as meaning the aggregate price for which goods are either bought or sold, supplied or distributed by a dealer. Sale is defined in section 2(xxi) as meaning every transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n no scope for the petitioner to fall back upon M/s. Oil India Limited to get back whatever Central excise duty borne by it. There was also no other condition attached in effecting the sale by the petitioner to M/s. Oil India Limited as regards the excise duty borne by the petitioner. The price as between the petitioner and M/s. Oil India Limited was fixed, which specifically did not include payment of Central excise duty can also be said that the benefit extended by the Government of India providing for payment of cash assistance to the extent of Central excise duty payment by the petitioner by specifically restricting such benefits in respect of certain projects above was by taking into account, the nature of the projects which had its own effect on national interest which in turn can be held to be in public interest. Therefore, in every respect whatever principles laid down in the decision in Neyveli Lignite Corporation Ltd. v. Commercial Tax Officer, Cuddalore reported in [2001] 124 STC 586 (SC) would squarely apply to the case on hand and consequently the entitlement of the petitioner in seeking for exclusion of the Central excise duty from the sale price on working out the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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