By C. B. Thakar | Advocate
G. G. Goyal, Janak Vaghani | Chartered Accountants
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Sale price — Sale to deemed exporter — Refund of excise duty to the manufacturer by the Government of India — Not recovered from the buyer — Does not form part of sale price — Section 2(h) of the Central Sales Tax Act, 1956.
Facts:
The dealer had sold industrial valves to the deemed exporter and issued sale bills showing price of the goods and CST without recovering excise duty, as under the Excise Act, under the scheme framed by the Government of India, the manufacturer was entitled to refund of excise duty paid on effecting sales to certain specified projects having status of deemed export. Accordingly, no excise duty was charged by the dealer on sale of goods to Oil India Ltd. having status of deemed exporter. The Department levied CST on cash assistance received from the Government of India for refund of excise duty by including it in sale price of goods sold. The dealer filed writ petition before The Madras High Court against the decision of the Tribunal, dated October 3, 2005.
Held:
Under the Scheme of Refund of excise duty, to the manufacturers supplying goods to specified parties had to bear the Central Excise duty and cash assistance is paid later by the Government of India. The benefit by way of cash assistance to the supplier was an exclusive arrangement between the Government of India and the supplier for certain specified reasons. This had no effect on the sale effected between the petitioner and its buyer. Under the agreement with buyer, the petitioner agreed to supply goods without recovering excise duty paid by it on such supply. Accordingly, sale is effected for a price excluding excise duty. The tax is payable on a sale price charged to buyer and would not include refund of excise duty by the Government of India by way of cash assistance to the petitioner. The writ petition filed by the dealer was allowed and the order of the Tribunal was set aside.
