Per Shri V.P. Gulati :

The issue in the appeal relates to the abatement of sales tax which was realised by the appellants from the customers and remitted to the State Government and which was credited to "Tax for Growth Fund" under a scheme formulated under the G.O. (P) No. 68/90/TD dt. 31.3.90 as notified in the gazette notification dt. 1.11.91 by the Government of Kerala.

2. The learned lower authority has held that this amount of the sales tax which under this scheme as above since it was ultimately credited to the appellants account by way of relief provided by the State Government, would not be abateable as the appellants are the beneficiary of this amount. The learned lower authority in this regard has held as under :-

Coming to the merit of the case, the party has pleaded that they were not the beneficiaries of the scheme and according to them, the scheme was announced by the Kerala Government as an incentive to Small Scale Industries. I agree that the State Government can notify schemes for encouraging Small Scale Industries. However, the question is whether such scheme had an impact on the assessable value of the goods cleared by such units. In the present case, M/s. Swathy Cables and Conductors Pvt. Ltd. were permitted to collect the sales tax from their buyers. The amount so collected was paid back by the Government to the District Manager of Kerala Financial Corporation towards discharging the loans taken by M/s. Swathy Cables and Conductors Pvt. Ltd. From this, it is obvious that although they collected an amount equivalent to sales tax from their buyers, M/s. Swathy Cables & Conductors Pvt. Ltd. were the beneficiaries of this amount and not the Kerala Government. Therefore, the price of the cables or conductors sold by them was, in fact, inclusive of the amount of so-called sales tax. Secondly, if Kerala Government had not returned the amount equivalent to the sales tax collected, M/s. Swathy Cables and Conductors Pvt. Ltd., would have adjusted their price in such a way as to realise sufficient amount to discharge their loan to Kerala Financial Corporation. In other words, they would have collected a higher price from their buyers. Since the amount of sales tax flowed back to them, they could avoid this eventuality. In view of this, I have no doubt in my mind that the amount collected by M/s. Swathy Cables & Conductors (P) Ltd. cannot be treated as sales tax for the purpose of Section 4 (4) d (ii) of the Central Excise Act, as they were the beneficiaries of this amount and not the Kerala Government.

3. The learned consultant for the appellants has stated that the scheme as above was formulated to provide subsidy for certain categories of SSI units which are specified in the Government Order and the appellants unit qualified for the same.

4. He has pleaded that the appellants opted for the benefit of the scheme and therefore when they filed the price list showing the ex-works price. The sales tax which was payable in respect of the goods, was separately shown in the invoices and collected from the customers. He has pleaded that the price list of the appellant were approved from time to time. Their RT-12 returns were also assessed and they filed all the documents viz. gate passes, invoices etc. He has pleaded the appellant paid the duty based on the ex-works price and no objection was taken by the authorities at the time of finalisation of RT-12 return. Subsequently, however, the authorities felt that the sales tax collected ultimately had enured to the benefit of the appellant when this amount after collection and remittance to the State Government was credited to the "Tax for Growth Fund" and the amount of the sales tax ultimately was adjusted against the term loans obtained from the State Government agencies.

5. He has pleaded that it not denied that what was collected under the head Sales Tax was in terms of the Sales Tax Act and the same was also credited to the State Governments. Hence, he has pleaded that the