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What is the meaning of the term “appropriate sales tax or value added tax” for the purpose of availing exemption / refund under notification no. 102/2007 Customs? |
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| 18-9-2007 | |||
What is the meaning of the term "appropriate sales tax or value added tax" for the purpose of availing exemption / refund under notification no. 102/2007 Customs? " Central Government has in compliance with the scheme of Vat to be implemented in India has given an exemption to the importer of goods by way refund from the levy of additional duty of customs levied u/s 3(5) of the Customs Tariff Act, 1975. One of the five conditions prescribed in the notification (condition no. 4) of the notification no. 102/2007 Cus dated 14.09.2007 is that such importer shall pay on sale of the said goods, appropriate sales tax or value added tax, as the case may be. But the meaning of the term "appropriate sales tax or Value added tax" is not defined in the notification. Therefore, the following questions may arise in due course and may lead to different of approach that may be taken by the department while granting any refund of additional duty of customs: (a) Whether "NIL rate" or "Goods falling under the category of exempted goods - schedule" of sales tax / value added tax would be considered as appropriate sales tax or value added tax? (b) Where goods are "subject to certain rate of tax" but "Exempted" by way of notification would be considered as appropriate sales tax or value added tax? The similar question with respect to some issue related to Central Excise was brought to the notice of honorable supreme court (Reported in 2007 - TMI - 1709 - SUPREME COURT OF INDIA). In this matter, honorable supreme court has denied the benefit of exemption notification by stating that: "The notification is intended to give relief against the cascading of excise duty - on the raw material and again on the goods made therefrom. There is no cascading effect when no excise duty is payable upon the raw material and the hardship that the notification seeks to alleviate does not arise." (For full text of judgment visit - 2007 - TMI - 1709 - SUPREME COURT OF INDIA - Central Excise).
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