Levy of service tax and excise duty
Nitin
(Querist) 25 February 2016
This query is : Resolved
Dear Sir, I have a query relating to transaction Value, please find as: 1. A Government Ordnance Factory is engaged in manufacturing of Guns which are issued to Armed forces and police Forces, as per the orders of the Ministry of Defence (MOD), all the guns are required to be compulsorily inspected & tested by its testing wing before its removal from Factory. Thus Inspection of Gun is mandatory before removal. MOD issued another order that 4% of the cost of guns to be recovered from the all the police forces under state Govt under state Govt. as cost of inspection. Cost of inspection need not to be recovered from Armed forces as it already falls under the ministry of defence itself. Now my query is that whether inspection charges to included in Transaction Value and charge excise duty on the 4% along with the Value of Gun or, testing and inspection be treated as separate service rendered by ordnance Factory to State Police Forces, or both service tax and excise duty is payable? As per the definition of Transaction Value under section 4 of Central Excise Act, price which the buyer is liable to pay includes in transaction value and liable to duty of excise. since the inspection charges are incurred before removal and the buyer is liable to pay inspection charges along with the price of product so in my opinion it must be included in transaction value. Is there any case law / circular/ notification available which state that service tax and excise cannot be levied on same value. Please look in the above matter and guide me.
Suhail A.Siddiqui
(Expert) 27 February 2016
There is establish law, if the value is not divisible/ could not determine separably then tax will be charged on the whole amount.
