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Commissioner of Central Excise, Jaipur-II v. Super Synotex (India) Ltd. and Others

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 9154-9156 of 2003)Decided 28 Feb 2014
Civil Appeal Nos. 9154-9156 of 2003
Justice Anil R. Dave · Justice Dipak Misra

Background

Manufacturers collected sales tax from customers but retained a substantial part under a State industrial incentive scheme. They disputed how much could be deducted when calculating the value subject to central excise duty. The batch also included claims to extend similar treatment to Central Sales Tax.

Decision Breakdown

The Supreme Court distinguished periods before and after the statutory change on 1 July 2000. The earlier incentive arrangement received the benefit of the applicable circular, so proceedings for that earlier period were closed and directed payments refunded. For the later period, only qualifying tax actually paid could be excluded, rather than the retained incentive amount. The Court remitted the Revenue matters for reassessment and lawful consideration of penalties, while dismissing the manufacturers' separate Central Sales Tax appeals.

Lesson Learnt

The excise treatment of a sales-tax incentive depends on the wording and date of the applicable valuation law. Collecting an amount from a customer as tax does not necessarily make the retained portion deductible after a change requiring actual payment.

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

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