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TMI Blog2024 (12) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... paid, as the remission was nothing but the incentive or capital subsidy which the State Government granted with respect to the investment made by the appellants in the earthquake ravaged region of Kutch of State of Gujarat. Instead of recovering Sales Tax and then refunding the same as capital subsidy, the State Government had remitted the same to appellants. Consequently like CST since VAT which was payable was actually paid the same is required to be excluded from the transaction value.' The facts are absolutely identical that the assessee s units are located in Kutch District and they are availing the Incentive Scheme-2001, similarly like in the present case. Therefore, the facts and legal issues involving in the above cases are exactly identical, in the facts of the present case. Therefore, applying the ratio of the above judgment, the issue is no longer res-integra. Hence, the demand is not sustainable. The impugned orders are set aside. Appeals are allowed. - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. C L MAHAR (TECHNICAL) Shri R Subramanya Shri Ishan Bhatt, Advocates for the Appellant Shri R R Kurup Shri R K Agarwal, Superintendents (AR) for the Respondent ORDER In al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex Electricals Pvt. Ltd Vs UOI 1992 961) ELT 413 (Guj.) 3. Shri R R Kurup, Learned Superintendent (AR) and Shri R K Agarwal, Learned Superintendent (AR) appeared on behalf of the Revenue and reiterated the findings of the impugned orders. 4. On careful consideration of the submission made by both the sides and perusal of record, we find that the issue that whether under the Incentive Scheme-2001, on the Sales Tax remittance by the State Government, the said Sales Tax amount though collected from the buyer of the goods, is includable in the assessable value of the excisable goods for the purpose of charging Excise Duty has been consistently settled in the following judgments:- a) Welspun Corporation Ltd 2017 (358) ELT 630 (T) which was upheld by the Hon ble Supreme Court of India as reported 2018 (360) ELT A 130 (S.C.) wherein the Tribunal held as under:- 5.1 We have gone through the relevant clauses of Chapter IV-A of the Gujarat Value Added Tax Act, 2003. We find that the Government of Gujarat had declared Incentive Scheme 2001 wherein benefits provided under Economic Development of Kutch District, Government of Gujarat, Industries of Mines Department. Subsequently under the Gujar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable at the time of clearance of goods but was remitted at a later date by passing of assessment orders by the Sales Tax authorities. We find that Section 4(c) and (d) of the Central Excise Act, defines transaction value and Place of removal as under :- place of removal means - (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory; from where such goods are removed; Transaction Value means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, stor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajasthan Sales Tax Incentive Scheme of 1989. This incentive scheme was in the nature of an exemption from the levy of Sales Tax III excess of 25% of the Sales Tax leviable, and consequently the balance 75% of Sales Tax was neither paid nor was payable. In the said case before the Hon ble Supreme Court the issue concerned collection and retention of Sales Tax or deferred payment of Sales Tax where the tax initially collected was retained with the assessee for a certain period of years. As per the scheme of the State Government a lump-sum payment of a certain percentage of this amount of. Sales Tax collected during the years was assumed to be sufficient discharge of the entire amount so collected, thus allowing the differential amount of Sales Tax to accure to the benefit of the assessee. Hence, I find that the ratio of this ruling would not be applicable to the case of the appellants. The Instruction F. No. 6/S/2014-CX.1, Dated 17-9-2014 issued by the Board based on the ruling of Hon ble Supreme Court in the case of Super Synotex India Ltd (supra) also would stand distinguished for the reason that in case of the appellants the amount of Sales Tax collected and allowed to be retain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales Tax allowed to be remitted to the respondent was towards capital subsidy. Even the requirement to re-invest 50% of the incentive in projects in the State of Gujarat further emphasizes the point that the amount of Sales Tax retained was only as capital subsidy. We further find from the facts narrated in the impugned order that the incentive receivable as capital subsidy by the appellants was from the Department of Industries, whereas the Sales Tax amount collected was payable to the Department of Sales Tax but allowed to be retained and adjusted against such incentive by their very department which also granted refund of tax paid on raw materials and CST paid. This scheme was thus operated by Department of Sales Tax and accordingly Commercial tax officer has necessarily to pass order for each tax period. It implies that the State Government of Gujarat under which both the departments fall, would have put in place some mechanism whereby the incentive paid to the appellants by way of retention of Sales Tax collected from their customers and refund granted on other two items (VAT on purchases and CST) is reimbursed by the Department of Industries to the Department of Sales Tax. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that sales and purchase of goods specified in Schedule I shall be exempt from tax, sub-Section (2) empowers the State Government by a notification in the official gazette to exempt any specified class of sales or purchase or sales or purchases by any specified dealer or specified class of dealers from payment of the whole or part of the sales tax. On the other hand, the scheme of remission provided for under Section 41 of the Gujarat Value Added Tax Act, 2003, contemplates that the State Government/Commissioner of Sales Tax may remit the whole or any part of the tax payable in respect of any dealer or class of dealers. It is clear from reading of Section 5(2) as also Section 41 of the Act that while Section 5 grants exemption from the levy/payment of sales tax, remission under Section 41 is granted in respect of any part of the tax payable by a dealer. In case of exemption no tax is actually paid or actually payable, whereas in the case of remission, tax is actually payable and paid which is allowed to be remitted by way of retention or by way of refund. In the instant case as already discussed above it is not that Sales Tax was not only payable but in fact it stood actually paid, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is reproduced below:- 5. We have carefully considered the submissions made by both the sides and perused the records. 5.1 We have gone through the relevant clauses of Chapter IV-A of the Gujarat Value Added Tax Act, 2003. We find that the Government of Gujarat had declared Incentive Scheme 2001 wherein benefits provided under Economic Development of Kutch District, Government of Gujarat, Industries of Mines Department. Subsequently under the Gujarat Value Added Tax Act, 2003, the scheme was defined as per Rules 18A, 18B, 18 C 18D. The Respondent company opted for Remission of Tax Scheme and was thus eligible for the Capital subsidy in the form of remission of Sales Tax subject to the conditions to be fulfilled. After applying to the Commissioner of Sales Tax/VAT, the eligible units were issued entitlement certificate and Form 110 to make them entitle to the benefit of tax deferment or tax remission as the case may be. The subsidy in the form of remission of sales tax was in fact percentage of capital investment. The intention of the State Government was, thus, instead of granting the capital subsidy to the units setting up their manufacturing facility, the subsidy be granted by r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. In terms of above Section 4, the duty is chargeable on excisable goods on its value which is to be determined at the time and place of removal. Thus whatever transaction value of the goods prevailing at the time of its removal shall be liable to excise duty, which however shall not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. In the present case we find that the sales tax is actually payable to the Government at the time of removal of goods from the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Sales Tax to accure to the benefit of the assessee. Hence, I find that the ratio of this ruling would not be applicable to the case of the appellants. The Instruction F. No. 6/S/2014-CX.1, Dated 17-9-2014 issued by the Board based on the ruling of Hon ble Supreme Court in the case of Super Synotex India Ltd (supra) also would stand distinguished for the reason that in case of the appellants the amount of Sales Tax collected and allowed to be retained was deemed to be paid in view of the sub-section (7A) of Section 11 of the Gujarat Value Added Tax Act, 2003. Even in the case of 11.2. CCE, Jaipur v. Shree Rajasthan Syntex Ltd. - 2015 (31S) E.L.T. 626 (S.C.) the Hon ble Supreme Court was seized of the Sales Tax Incentive Scheme, [1989] issued by the State of Rajasthan where full incidence of Sales Tax was allowed to be collected from the buyer, 75% thereof was retained by the respondent and the remaining 25% was paid to the State Government. Since the Incentive Scheme availed by the appellants was not of retention of sales tax but comprised of incentive equal to capital invested to be availed in any of 3 different ways as outlined at para 10.3 above. One of which i.e. its sub p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly Commercial tax officer has necessarily to pass order for each tax period. It implies that the State Government of Gujarat under which both the departments fall, would have put in place some mechanism whereby the incentive paid to the appellants by way of retention of Sales Tax collected from their customers and refund granted on other two items (VAT on purchases and CST) is reimbursed by the Department of Industries to the Department of Sales Tax. Hence for the above reason also we find that such amount, allowed to be remitted to the respondents as incentive which was otherwise payable to the Sales Tax department, cannot form part of the transaction value. 5. 7 The respondents have argued that in similar situation in case of manufacturers of fertilizers, where the subsidy was being received by such manufacturers from the Department of Fertilizers the C.B.E. C. vide Circular No. 983/7/2014-CX., dated 10-7-2014 has clarified that subsidy is not any additional consideration flowing directly or indirectly from the buyer to the seller and hence, is not required to be included in the assessable value. Applying the same analogy to the facts of the present case and agreeing with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the levy/payment of sales tax, remission under Section 41 is granted in respect of any part of the tax payable by a dealer. In case of exemption no tax is actually paid or actually payable, whereas in the case of remission, tax is actually payable and paid which is allowed to be remitted by way of retention or by way of refund. In the instant case as already discussed above it is not that Sales Tax was not only payable but in fact it stood actually paid, as the remission was nothing but the incentive or capital subsidy which the State Government granted with respect to the investment made by the appellants in the earthquake ravaged region of Kutch of State of Gujarat. Instead of recovering Sales Tax and then refunding the same as capital subsidy, the State Government had remitted the same to appellants. Consequently like CST since VAT which was payable was actually paid the same is required to be excluded from the transaction value. Hence for this reason also the sales tax remitted by the Government towards incentive of Capital investment cannot be a part of the transaction value. 6. In view of our above observations, we hold that the impugned order requires no interference. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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