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Additional Consideration

Sanjay Sharma (Astt. Manager-Indirect Taxation) (76 Points)

10 June 2008

Central Sales Tax collected at the rate of 4 % but paid only 2 % and showing it (rest of the 2% ) in the books of accounts as "Other Receipts".

My Question is -

1. Is it a case of Additional consideration in terms of the Excise Valuation Rules ?

2. Is Excise duty paybale on the amounts showing as "Other Receipts" in the books of accounts.

Pls explain/ clerify.

Regards

Sanjay Sharma

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3 Replies

Shyam Lal Naik (Service) (6156 Points)
Replied 10 June 2008

The additional tax collected(albeit erronously) should be deposited with the sales tax authorities. Indirect taxes are collected on behalf of the Govt. It is not a revenue of the seller(other receipt).

Since the consideration legally does not belong to the seller, it can not be considered as additional consideration for excise valuation.

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Sanjay Sharma (Astt. Manager-Indirect Taxation) (76 Points)
Replied 10 June 2008

Dear Sir, The CST collected form the customer at the rate of 4% (Intentionnaly not erronously) and deposited with the sales tax authorities only 2 % from that. Is this a case of avasion of sales tax or excise, as when the Excise Audit party has found the mony in accounts as "other Receipts / Other income. Question - 1. Is this a correct practice ? 2. If this is not a correct practice, what type of offence is there ? 3. Is the assessee liable for punishment under Central Excise or Sales Tax ? 4. Can this case be rported to the DRI ( Department of Revenue Intelegence ? Pls explain. pls explain

Shyam Lal Naik (Service) (6156 Points)
Replied 10 June 2008

Dear Mr. Sharma,

I am not expert in Sales Tax Matter. How ever it appears to me that :-

1. This is not a correct practice. You are misrepresenting to customers that 4% is govt. levy.

3. Certainly punishable under CST.

Can not comment on Q2 & Q4.

There is a provision under Service Tax that realisation representing service tax erronously collected should forthwith be remitted to Govt's credit. The ratio should apply to instant case.

Lets look for more opinion.