VKG Packers Vs Union of India (Karnataka High Court)
Karnataka High Court held that notification no. 2/2023- Compensation Cess (Rate) dated 31.03.2023 and 3/2023 dated 26.07.2023 directing to pay compensation cess at Maximum Retail Price [MRP] as against transaction value runs counter to the CGST Act. Accordingly, the said notifications are quashed.
Facts- The petitioners, though different in the batch of these petitions, call in question notification dated 31-03-2023 and its amended notification dated 26-07-2023, by which the petitioners are directed to pay compensation cess at Maximum Retail Price (‘MRP’) as against the transaction value, as determined under Section 15 of the Central Goods and Services Tax Act, 2017.
Conclusion- Held that the notification runs counter to Section 8(2) of the Compensation Act and Section 15 of the CGST Act. Section 15 of the CGST Act clearly holds that value of supply of goods is the transaction value, which is the price actually paid or payable for supply of goods. As observed, Section 8(2) of the Compensation Act includes compensation cess within the value of supply. The proviso to Section 8(2) of the Compensation Act in unambiguous terms states that the value of compensation cess chargeable on any supply shall be determined as per Section 15 of the CGST Act. Therefore, the notification which brings in value of cess linked to the MRP and not to transaction value runs counter to the Act.
