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2014 Supreme(Online)(SC) 172
SUPREME COURT
, J
Revenue – Appellant
Versus
Maruti Udyog Ltd. – Respondent
C. A. No. 5183 of 2004
Retention of tax collected does not exempt a unit from its tax obligations; actual payment to state is necessary.
Headnote:(A) Haryana General Sales Tax Rules, 1975 - Rule 28-C - The Tribunal held that the withholding of sales tax was a deferment and not a concession. It was determined that sales tax retained was not actually paid and thus should be included in the transaction value.,
(B) Appeal process - The Tribunal's rationale was flawed in interpreting deferment versus concession, leading to an erroneous ruling favoring the assessee. Findings reversed to restore the adjudicating authority's decision. (Paras 1, 24, 25)
Facts of the case:
The Revenue issued a show-cause notice asserting the respondent improperly retained sales tax on vehicle sales contrary to the rules governing tax concessions. The entitlement certificate allowed for sales tax retention under specified conditions pertaining to expansions and cap limits.
Findings of Court:
The court reinforced that 50% sales tax retained was not actually paid to the state government, confirming that the Tribunal misapplied the relevant rules and upheld the necessary duties owed.
Issues: Whether the retained tax constituted a concession or a deferment under existing laws. The applicability of exemptions granted by the HPC relating to tax assessments was central to the ruling.
Ratio Decidendi: The court articulated the principle that merely retaining tax collected does not absolve the obligation under taxation laws; tax liability remains until actually remitted to government coffers. The original ruling favored incorrect jurisdictional interpretations leading to misdirected outcomes.,
Result: The appeal is allowed to the above extent.
| Table of Content |
|---|
| 1. tribunal's ruling on sales tax concession vs. deferment is incorrect. (Para 1 , 15 , 16) |
| 2. entitlement certificate confirms tax concession parameters as set by hpc. (Para 3 , 4 , 5 , 18) |
| 3. court reinstates adjudicating authority’s ruling on sales tax obligations. (Para 24 , 25 , 26) |
1. The question for consideration is whether the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal) was right in holding, Maruti Udyog Ltd. v. CCE , 2004 (166) ELT 360 (Tri) that the High - Powered Committee (HPC) constituted under the provisions of R.28 - C of the Haryana General Sales Tax Rules, 1975 (the Rules) had merely deferred payment of sales tax by the respondent assessee and had not granted it any tax concession. In our opinion, the question must be answered in the negative and in favour of the Revenue.
2. The facts
The assessee is a prestigious unit manufacturing and selling vehicles in the State of Haryana. On 4-10-2002 the Revenue issued a show - cause notice to the respondent assessee on the ground, inter alia, that on the sale of its vehicles for the quarters ending September and December 2001 and March and June 2002 the assessee had retained 50% of the sales tax collected by it from its customers. The retention allegedly was on the strength of an entitlement certificate dated 1-8-2001 issued by the Deputy Excise and Taxation Commissioner in Haryana under the provisions of R.28 - C of the Rules.
3. R.28 - C of the Rules reads as follows:
"28 - C. Tax concessions, class of industries, period and other conditions. S.25 - A. - (1) Concessions of tax payable under the Acts shall be available to an eligible industrial unit in the manner, for the period and at the scale given hereinafter.
(2) A unit availing tax concession under this Rule shall not be entitled to any other tax concession under S.13 - B or S.25 - A of the Act.
(3) xxxx xxxx xxxx
(c) 'eligible industrial unit' means -
(I) xxxx xxxx xxxx
Note. - The eligibility of units in pipeline shall be determined by High - Powered Committee in case of prestigious units and by Higher - Level Screening Committee in other cases. The decision of High - Powered Committee / Higher - Level Screening Committee shall be final.
(4) xxxx xxxx xxxx
(5)(a) Subject to other provisions of this Rule, an eligible industrial unit (except a prestigious unit) holding a valid entitlement certificate shall be entitled to the concession of deferment of payment of sales tax including Central sales tax and conversion of the same to capital subsidy, computed on the sale of goods (including byproducts and waste) manufactured by the unit or arising from the process of manufacture and declared in the sales tax returns filed by the unit, without taking into account the rebate admissible under S.15 - A or the Rules framed under the Act, at the scale, subject to the time - limit and the extent related to the fixed capital investment (FCI)...
xxxx xxxx xxxx
and the unit shall be required to pay only the balance of tax after deducting the rebate and the capital subsidy plus any purchase tax payable at its hands but no refund of any amount of tax paid shall accrue to the unit by operation of these provisions.
Explanation I.-- xxxx xxxx xxxx
Illustration.-- xxxx xxxx xxxx
(b) Decision about the grant of tax concession to prestigious unit shall be taken by the High - Powered Committee on the basis of factors like employment generation, likely revenue, growth of ancillaries, impact on overall industrial growth, etc. A prestigious unit shall not be, as a matter of right, entitled to benefits available to other units. "
The Note below sub-rule (3) provides that the eligibility of a prestigious unit to a tax concession shall be determined by a High - Powered Committee (HPC).
4. There is no dispute that the assessee is a prestigious unit; that its case was considered by the HPC for the grant of a tax concession; that the HPC took the following decision on 14-6-2001:
"The relevant facts narrated in the agend
