CX - Assessment being final and excise duty had been discharged correctly with no indication of sales tax 'paid' or 'payable', no variation in assessable value at a later stage is permissible: CESTAT by Majority
By TIOL News Service
CHANDIGARH, MAY 10, 2018: THE appellant entered into a contract for supply of telephonic instruments to M/s BSNL, Bihar. As per the purchase order, the prices are inclusive of all taxes, freight etc.
On an understanding that that no sales tax is payable on these telephonice instruments, the appellant raised invoices with composite prices of Rs. 265/- per unit as per the contract. Incidentally, the Sales Tax Department denied exemption and the appellant was required to pay Sales Tax.
Appellant claims that they were under bona fide belief that they are entitled for exemption from Sales Tax, therefore, they did not charge the component of Sales Tax in the invoices. Consequently, they had paid excess duty on the component of Sales Tax as their contract was composite contract and in that circumstances they are entitled for refund.
The lower authorities rejected the refund claim.
The Member (Judicial) inter alia observed –
"6. …, as the price was inclusive of all taxes including Sales Tax, in that circumstances, the transaction value of goods has to be determined accordingly. Therefore, the amount of Sales Tax paid by the appellant during the normal period of limitation was required to be deducted from the composite price of the goods payable by the appellant and on that amount, the duty was not payable. In that circumstance, we hold that the appellant is entitled to claim the refund of excess duty paid by them on account of Sales Tax paid by them."
As regards the bar of unjust enrichment, adverting to Tribunal decisions in Subha Engineers Pvt. Ltd. and Panibati Rubber Limit ed where it is held that when the price is inclusive all taxes, in that circumstances, the bar of unjust enrichment is not applicable, the Member (J) concluded that bar of unjust enrichment is not applicable to the facts of the present case.
The appeal was allowed with consequential relief.
The Member (Technical) did not agree.
After extracting the per price clause of purchase order, the Member(T) observed that it was evident that any increase in duties, tax levy after expiry of delivery date had no bearing on the price of the past clearances, therefore, any increase in duty/tax is to be borne by the appellant from their account.
Agreeing with the findings of the Commissioner (Appeals) that no excise duty had been paid on the Sales Tax element and hence there is no excess payment of duty, more so since no concrete/documentary evidence was produced to prove that the contract price actually included the Sales Tax, the Member(T) concluded that there was no infirmity in the impugned order rejecting the refund claim.
Resultantly, the matter came to be referred to the third Member.
The third Member(T) heard the matter recently and observed thus -
+ The assessable value was arrived at after deducting excise element. No deduction was made for sales tax as no sales tax was paid or payable. This much is clear from the details entered in the invoice.
+ It is clear that the appellant is claiming exemption for the goods. The same was later denied by the sales tax authorities resulting in payment of sales tax. The "transaction value" as mentioned above clearly talks about sales tax actually paid or actually payable. In the present case when the goods were cleared on the final assessment neither sales tax was paid or actually payable.
+ Later, the sales tax exemption/dispute was settled against the appellant. This will not make the final assessments already made, without any room for future completion/finalizing of assessment by way of provisional assessment, for deduction of sales tax payable. In other words, when the goods were finally assessed and cleared the sales tax deduction on such clearances either should be on "actually paid" or "actually payable". In the present case, both are not applicable.
+ The claim of the appellant that the sales tax dispute was settled against them later will not have any bearing as the invoice and the assessments were on the claim of the appellant that no sales tax was paid or payable.
+ In other words, the assessment being final and excise duty has been discharged correctly with no indication of sales tax 'payable' or 'paid', no variation in assessable value later is permissible.
+ Question referred is answered against the appellant.
In view of the Majority decision, the appeal was dismissed.
(See 2018-TIOL-1478-CESTAT-CHD)
