sales tax set-off and excise
Querist :
Anonymous
(Querist) 24 August 2010
This query is : Resolved
Sales Tax collected at the prescribed rate of 12.50 % but paid only after deduction sales tax set-off available on purchases as per Maharashtra Vat Rules and showing it 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 payable on the amounts showing as "Other Receipts" in the books of accounts.
Pls explain/ clerify.
R.Ramachandran
(Expert) 16 September 2010
Dear Anonymous,
In terms of Section 4 of the Central Excise Act, 1944, the transaction value shall not include the amount of sales tax.
Any VAT paid at the time of purchase has to be shown in the books of accounts as Input Tax Credit. Similarly, any VAT payable should be shown as Output VAT.
However, you state that you are showing in the books some amounts (according to you the VAT collected from the customer) as "Other receipts". Probably this wrong depiction in the books accounts would raise suspicion in the minds of the Excise Authorities as some additional consideration flowing from the customer towards the value of the goods. While there seems to be no additional consideration, which would attract excise duty demand, you may have to properly show the input tax credit and output tax in the books of accounts to avoid such confusion.
