9911796707
TMI Blog2014 (9) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... enue. Reason:- The facts 2. The assessee is a prestigious unit manufacturing and selling vehicles in the State of Haryana. On 4 th October, 2002 the Revenue issued a show cause notice to the respondent/assessee on the ground, inter alia, that on the sale of its vehicles for the quarters ending September and December 2001 and March and June, 2002 the assessee had retained 50% of the sales tax collected by it from its customers. The retention allegedly was on the strength of an entitlement certificate dated 1st August, 2001 issued by the Deputy Excise and Taxation Commissioner in Haryana under the provisions of Rule 28-C of the Rules. 3. Rule 28-C of the Rules reads as follows:- Rule 28-C "Tax concessions, class of industries, period and other conditions. (Section 25A) (1)Concessions of tax payable under the Acts shall be available to an eligible industrial unit in the manner, for the period and at the scale given hereinafter. (2)A Unit availing tax concession under this rule shall not be entitled to any other tax concession under Section 13-B or Section 25-A of the Act. (3)(c) "eligible industrial unit" means (1)x x x Note:- The eligibility of units in pipeline sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores would remain the ceiling. The period of benefit would be extended to 14 years within the existing ceiling of Rs. 564.35 crores and in lieu thereof MUL would waive its claim for tax incentive for all subsequent expansions i.e. for IInd, IIIrd. The incentive would be given only in respect of vehicles rolled out of production capacity of 70,000 vehicles added as a result of first expansion and not to the production augmented by capacity addition of 30,000 vehicles as a result of second expansion. The MUL will start availing the benefit of sales tax concession from the date of entitlement as per Rule 28C. The Entitlement Certificate will be issued by the DETC concerned and MUL will submit the requisite documents for the issuance of entitlement certificate to the DETC concerned." 5. The show cause notice alleged that on a reading of the above decision, Rule 28-C and the entitlement certificate issued to the assessee, a tax concession of Rs. 564.35 crores could be availed of by the assessee between 1st August, 2001 and 31st July, 2015. The assessee could collect sales tax from its customers but was required to deposit only 50% thereof with the exchequer while retaining the bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicating authority determined an amount of about Rs. 7.21 crores as central excise duty payable by the assessee on the transaction value and also imposed a penalty of Rs. 1 crore on the assessee. Decision of the Tribunal 10. Feeling aggrieved, the assessee preferred an appeal before the Tribunal. The appeal was taken up for consideration by the Tribunal and by an order dated 16th January, 2004, the appeal was allowed. 11. The assessee contended before the Tribunal that it is not as if it was exempted from payment of sales tax to the extent of 50% collected from the customers but that the payment of sales tax was deferred in the case of the assessee. Reliance in this regard was placed by the assessee on Section 25A of the Haryana General Sales Tax Act, 1973 (the Act). 12. Section 25A of the Act reads as follows:- "Section 25A. Deferment of tax.- Notwithstanding anything to the contrary contained in this Act, the State Government, if satisfied that it is necessary and expedient so to do in the interest of industrial development of the State, may defer the payment of tax by such class of industries, for such period, either prospectively or retrospectively, and such to such con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a prestigious unit)"] There is no dispute that the assessee is a prestigious unit and therefore Rule 28-C(5)(a) is not at all applicable and the Tribunal was completely in error in relying upon this sub-rule. What is applicable to the present case is Rule 28-C(5)(b) which mentions that the grant of a tax concession to a prestigious unit will be decided by the HPC. 19. The HPC in its decision taken on 14 th June, 2001 permitted the assessee to retain 50% of the sales tax collected from the customers for a period of 14 years subject to a ceiling of Rs. 564.35 crores. There is no mention in the decision of the HPC about adjustment of this amount against any scheme or any capital subsidy. On the contrary, the decision of the HPC is relatable to Rule 28-C (5)(b) which refers to "grant of tax concession to prestigious units" and for the implementation of this decision, an entitlement certificate would be issued to the assessee. The Revenue is right in its contention that the decision of the HPC clearly does not support the case of the assessee. 20. Pursuant to the decision of the HPC, the assessee was issued an entitlement certificate in Form ST 72B of the Rules. The entitlement certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representation made by the assessee to the Commissioner, Commercial Sales Tax Department in the State Government on 15th September, 2001 and the response received by it on or about 22nd October, 2001. The response received by the assessee clarified that the amount allowed to be retained by the assessee on the basis of the entitlement certificate would be retainable as capital subsidy and not as an exemption from sales tax. This response was sent by the Joint Director (legal) from the office of the Prohibition, Excise & Taxation Commissioner of the State Government. 23. We are not able to appreciate the authority of the Joint Director to issue such a response which is clearly not supported by the decision of the HPC taken on 14th June, 2001 nor is it in consonance with the entitlement certificate issued to the assessee nor is it in consonance with Rule 28-C(5)(b). As mentioned above there is nothing in the decision of the HPC or the entitlement certificate to indicate that 50% of the sales tax retained by the assessee on the sale of its vehicles was liable to be adjusted against any capital subsidy entitlement of the assessee. 24. Learned Additional Solicitor General contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les tax or other taxes is not paid at the time of transaction but paid subsequently, for example, sales tax payable under a deferment scheme." 27. Insofar as the present case is concerned, there is no doubt that 50% of the sales tax collected was retained by the assessee and was not actually paid to the exchequer nor was it actually payable since the HPC permitted the assessee to retain that amount. 28. Therefore, whichever way the issue is looked at, the fact remains that the assessee retained with it 50% of the sales tax collected from its customers and it was neither actually paid to the exchequer nor was it actually payable to the exchequer. That being the position, the transaction value was required to be calculated by including the amount of about Rs. 22.44 crores retained by the assessee. 29. In our opinion, the Tribunal misdirected itself in law on several counts and erroneously decided the appeal in favour of the assessee and, therefore, the order of the Tribunal is set aside. 30. It was eventually submitted by learned counsel for the assessee that on the facts and in the circumstances of the case penalty ought not to be imposed upon the assessee particularly sin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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