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'DHARMADA' NOT TO BE ASSESSED FOR EXCISE DUTY: Supreme Court

Team SoOLEGAL 10 Apr 2019 2:07pm

'DHARMADA' NOT TO BE ASSESSED FOR EXCISE DUTY: Supreme Court

Dharmada is an offering which is made for the purpose of charity. It is very much distinct from the commercial transaction. A demand of duty was raised by the Excise in respect of Dharmada. It was contended that such amount is a part of the price paid for the sale of manufactured goods, thus it should be included for computing assessable value. The assessee's contention was rejected by the CESTAT that Dharmada was not part of the transaction value.

Supreme Court bench comprised of Justice SA Bobde, Justice Deepak Gupta and Justice Vineet Saran. It observed that an amount is paid at the time of the sale transaction for a purpose other than the price of the goods, it cannot form part of the transaction value; also for the reason that such payment is not for the transaction of sale i.e. for the transfer of possession of goods. Any payment made alongside such a transaction cannot be treated as consideration for the goods.

The bench also made a note that the Panchmukhi c ase, on which the assessee relied, was decided because the counsel for the revenue submitted that the matter is covered by the decision in Tata Iron & Steel case. Also the counsel for the assessee was not in a position to dispute this legal position.

The bench observed: 
"We find from the facts of the case before us that the receipts on account of Dharmada were voluntary, earmarked for charity and in fact credited as such. Though the payment as Dharmada has been found to be voluntary, it would make no difference to the true character and nature of the receipts even if there were found to be paid compulsorily because the purchaser, purchased the goods out of their own volition" 
Thus, Supreme Court has held that when any amount is paid in the form of Dharmada (along with the actual price), it cannot be said that such amount is paid in consideration of the goods. Hence, such amount is not to be included in the transaction value for the purposes of assessments for excise duty.

Tagged: Supreme Court   Customs Excise and Service Tax Appellate Tribunal   Justice SA Bobde   Justice Deepak Gupta   Justice Vineet Saran  
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