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TMI Blog2010 (7) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on subsidy is not deducted. Therefore the difference in amount which the assessee has no right to retain is now ordered to be paid to the Department by the forfeiture order. Therefore, the Tribunal was not justified in interfering with the well considered order passed by the first appellate authority as well as the assessing officer. In that view of the matter, the order of the Tribunal cannot be sustained. Hence the order passed by the assessing officer as confirmed by the appellate authority is restored. - S.T.R.P. No. 127 of 2008 - - - Dated:- 22-7-2010 - KUMAR N. AND MRS. NAGARATHNA B.V., JJ. ORDER:- The order of the court was made by N. KUMAR J. The Revenue has preferred this revision challenging the order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 13,84,653 and Rs. 21,73,760 for the assessment years 1994-95 and 1995-96. The assessee had collected taxes on the subsidy amount by including the said taxes as part of turnover as per form 3 and original annual return. The taxes so collected being Karnataka sales tax and surcharge were collected from dealers/distributors by separately charging in the sale invoices. The dealers/distributors were aware about payment of taxes by them even on subsidy amount. The price on chemical fertilizers which has been collected from the farmers by the dealers/distributors had included the taxes collected on subsidy and therefore the price inclusive of taxes on subsidy was paid by the farmers. Such being the case, the assessee was not permitted to reta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut within that price was not violative of provisions of section 18 of the Act. The maximum retail price including the tax component had been passed on to the consumers, namely, farmers. In this process the assessee had realised taxes on subsidy from the farmers which could not have been retained by them and cannot also be added up to the basic price of the product. In the result, they were in clear violation of section 18(1)(b) of the KST Act, 1957. Accepting this, due to changed position of law, they could have either remitted or should not have claimed the adjustment of taxes as per revised annual return. Therefore the objections were overruled by the assessing officer and the proposal for forfeiture of tax collected on subsidy was upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the sale prices of fertilizers exclusive of subsidy and therefore the assessee could not be held to have committed any contravention of sub-section (1) of section 18 of the Act, so as to be attracted by the forfeiture provision of sub-section (3) of section 18AA of the Act. Therefore the Tribunal set aside the orders passed by the lower authorities and granted the benefit claimed by the assessee. Aggrieved by the said orders, the Revenue has filed this revision. The learned counsel for the Revenue submitted that as is clear from the invoice, it is not in dispute that tax is levied and collected on the amount inclusive of subsidy. However while selling the products they have given deduction of subsidy of Rs. 10,000. Therefore, it is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Surcharge 2% 2,056 R.T.C. 15% 390 Concession 5% 103 (Subsidy) 1,000 10,000 Net invoice value 95,268 The aforesaid figures indicate the basic cost of the fertilizers as Rs. 1,02,800, Rs. 2,05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount which they have collected and which they have actually paid is strictly in accordance with law. The Tribunal committed a serious error in proceeding on the assumption that tax is collected on the net amount excluding the subsidy. The amount of tax is collected before giving deduction to the subsidy. Thus though subsidy amount is deducted but tax collected on subsidy is not deducted. Therefore the difference in amount which the assessee has no right to retain is now ordered to be paid to the Department by the forfeiture order. Therefore, the Tribunal was not justified in interfering with the well considered order passed by the first appellate authority as well as the assessing officer. In that view of the matter, the order of the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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