The Central Board of Excise and Customs has issued an instruction F. No. 6/8/2014- CX.1 dated September 17, 2014 in terms of the judgment of the Apex Court in case of Super Synotex India Ltd. [2014-TIOL-19-SCCX] on the issue of abatement of Sales Tax under an abatement scheme where the Assesse has been allowed to retain 75% of the Sales Tax collected from the buyer and was required to deposit only the remaining 25% with the State Government.
The Apex Court has held that the Assessable Value of the excisable goods would include the Sales Tax amount retained by the Assessee under Sales Tax Incentive Scheme.
Our Comments: It is going to be tough task to calculate excise duty and sales tax in the instant case as Sales tax is calculated normally on the value plus excise duty.
Now, the assessee need to add up sales tax to the value to calculate the excise duty, which will go up and when excise duty goes up, Sales Tax goes up, part of which should again be added to the value, then the value goes up, excise duty goes up and sales tax goes up…… – and so, it will go perennially.