We are importer-traders of metal products in India. We clear goods on payment of appropriate customs duty, including SAD. We wish to apply for a refund of SAD as per the notification 102/07 dated 14 September 2007. However, the problem is that some of our products are exempt under state VAT legislation. Can we claim a SAD refund on goods that are exempt from payment of VAT. Please help.
Notification 102/07 dated 14 September 2007 provides that refund of SAD (special additional duty) would be granted subject to fulfillment of prescribed conditions. One of the conditions is that document evidencing payment of appropriate VAT/CST on sale of such imported goods must be produced by the importer. Accordingly, payment of VAT/CST is a pre requisite for claiming the refund of SAD.
However, recently in the case of Commissioner of Customs, Patna vs. Katyal Metal Agencies [2012-TIOL-1053-CESTAT-KOL], the Kolkata Tribunal while dismissing a stay petition filed by the Department held that SAD is levied to counterbalance VAT. In case the goods are exempt from VAT, the same should be exempt from SAD also. Accordingly, SAD paid by the assessee should be refunded.
Based on this, the SAD refund on imported goods that are exempt from VAT may be claimed. However, please note that this is not the final judgment and the final judgment of the Tribunal may vary from the present finding. Further, even if the present finding is confirmed by the Tribunal, the same may be appealed against by the department at the higher appellate levels.
Jharkhand entry tax
Our company manufactures garments in Jharkhand. We have been informed that recently some amendment has been made to the entry tax laws of Jharkhand. Can you please give us the exact details of the amendment?
Please note that there has not been any amendment in the entry tax laws of Jharkhand. Instead, a judgment has been issued by the High Court of Jharkhand, in the case of Tata Steel Ltd and others v The State of Jharkhand [2012-VIL-56-JHAR], holding that the charging section of the Jharkhand Entry Tax Act is ultra vires the Constitution.
In this case, the Constitutional validity of the charging section of the Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011 (the Act), was challenged on the grounds of the same being ultra vires the Article 301 of the Constitution of India i.e. the tax levied does not give quantifiable and measurable benefits to the tax payers. It was held that the burden will be on the state as a facility provider to show by placing the material before the court that the entry tax levied is a reimbursement/ recompense for the benefits provided to the tax payers. Since no database was prepared by the state to indicate the quantifiable data on the basis of which the entry tax was sought to be levied, it was held that though it is a levy of compensatory tax, it does not provide quantifiable and proportionate benefits to the tax payers. Consequently it was declared that the charging section of the Act is ultra vires and unconstitutional and accordingly the state of Jharkhand cannot enforce any of the provisions of the Act.
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