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Commissioner of Central Excise, Delhi-III v. Maruti Suzuki India Ltd.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 5183 of 2004)Decided 3 Sept 2014
Civil Appeal No. 5183 of 2004
Justice Madan B. Lokur · Justice Kurian Joseph

Background

Maruti collected sales tax from vehicle buyers but retained half under a Haryana incentive for its first expansion. Excise authorities included approximately Rs. 22.44 crore retained by the company in the vehicles' taxable transaction value and imposed duty and a penalty. The Tribunal reversed that decision, treating the incentive as deferred tax adjusted against a capital subsidy.

Decision Breakdown

The Supreme Court restored the duty assessment but removed the penalty. The applicable provision for a prestigious industrial unit, the committee's decision and the entitlement certificate granted a tax concession, rather than postponing payment or providing the claimed subsidy adjustment. Since the retained amount was neither paid nor payable to the State, it could not be deducted as sales tax when calculating excise transaction value. The company's success before the Tribunal nevertheless made it inappropriate to impose the penalty.

Lesson Learnt

For this incentive, calling a customer charge sales tax did not make the retained portion deductible from excise value. The actual concession documents and whether tax remained payable controlled the assessment; penalty was considered separately.

Official source (sci.gov.in)View Judgment (PDF)

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