The Customs, Excise and Service Tax Appellate Tribunal, New Delhi in the case of Maihar Cement v. CCE & ST Jabalpur allowing the appeal held: if subsidy amount is paid by way of VAT 37B Challans or is adjusted against the VAT Payable, they shall not be included in the assessable value.
The assessee, a cement and clinker manufacturer was entitled to a refund of 25% VAT under the MP Industrial Policy 2004. The refund amount was deposited by the State Government towards future VAT payment on the assessee’s behalf but the appellant collected full VAT from their buyers.
The departmental officers contended that deduction of VAT from Transaction Value is admissible only for the amount of tax actually paid or payable. Also, this difference is required to be included in the Transaction Value for payment of duty.
The adjudicating authority allowed the department’s proposal to include the refund amounts in the transaction value and decided against the assessee.
Before the Tribunal, it was contended on behalf of the appellant-assessee that the facts of the decision relied upon by the department in the instant case does not apply to the facts of the present case. The department on the other chose to sustain on the reliance placed.
After hearing both the parties, the Tribunal relying on a number of decisions explained that where in a case the issue before the Tribunal was that whether the disbursed amount in form of subsidy are required to be included in the assessable value of the goods manufactured by the appellants. If a part of such VAT is given back to the assessee in form of subsidy in Challan 37 B, such challans are good as cash but can be used only for payment of VAT in the subsequent period and hence are considered legal payments of tax.
The Court hence concluded that the Revenue is not correct in taking the view that VAT liability discharged by utilizing such subsidy by way of book adjustment against VAT cannot be taken as VAT actually paid. There is no justification for inclusion of the adjusted amount in the assessable value.Subscribe Taxscan AdFree to view the Judgment