The Allahabad High Court held that Superior Kerosene Oil (SKO) shall continue to be an excisable goods even if GST on the supply of Kerosene Oil is levied. So Indian Oil was not eligible to make a declaration under the “Sabka Vishwas Scheme”.
The petitioner, M/s Indian Oil Corporation Limited is engaged in the manufacturing and clearance of various petroleum products falling under Chapter 27 of the Central Excise Tariff Act, 1985.
The petitioner paid Central Excise duty on the basis of the Central Excise invoice in which the value was shown much lower than the actual price recovered by the petitioner from the buyers as per the commercial invoices in respect of SKO.
Consequently, a show-cause notice under Section 11 of the Central Excise Act, 1944 was issued to the petitioner by the Commissioner of Central Excise, Lucknow, requiring them to show cause as to why Central Excise duty short paid may not be recovered under Section 11-A and penalty under Section 11-AC of the Act, 1944 read with Rule 25 of the Central Excise Rules, 2002, be not imposed.
The petitioner submitted a reply in which the petitioner admitted lower amount shown in the Central Excise invoices and higher amount shown in the commercial invoices but took the stand that subsidy received from the Government will not form part of the value for the purposes of payment of Central Excise Duty.
According to the petitioner final order has not yet been passed pursuant to the show cause notice. In the meantime, the Finance (No.2) Act, 2019 enacted “Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019” which was applied to demands under several enactments including Central Excise Act, 1944. Section 124 of the Finance (No.2) Act, 2019, provides for relief available under the Scheme.
The petitioner raised the issue that declaring continued existence/ non-deletion of SKO from the Fourth Schedule of Central Excise Tariff Act, 1944, after July 1, 2017, to be violative of section 174 of Central Goods and Service Tax 2017 and also violative of Entry No.84 of List I (Union List) of the Seventh Schedule to Constitution of India, which has been amended by the Constitution (One Hundred and First) Amendment Act, 2016.
The division bench of Justice Surya Prakash Kesarwani and Justice Dr. Yogendra Kumar Srivastava clarified that “Manufacture” is the taxable event under the Central Excise Act, 1944 while under Section 9 of the CGST Act/UPGST Act, the event of taxation is the supply of goods or services except the supply of alcoholic liquor for human consumption.
It was further clarified that under Section 9(2) of the CGST Act/UPGST Act empowers to levy tax on supply of petroleum crude, high speed diesel oil, motor spirit, natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council.
Therefore, the court held that GST may be levied even on such goods which are excisable goods under the Central Excise Act, 1944. Therefore, Superior Kerosene Oil (SKO) shall continue to be an excisable goods under the Central Excise Act, 1944 even if GST on the supply of Kerosene Oil (PDS) is levied under the GST laws.
The court held that the petitioner could avail the benefit of the “Sabka Vishwas Scheme” only in accordance with the provisions of the Scheme. “Sabka Vishwas Scheme” has specifically excluded persons seeking to make declarations with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944. Undisputedly, S.K.O. is an excisable goods set forth in the Fourth Schedule to the Act, 1944. The petitioner was not eligible to make a declaration under the “Sabka Vishwas Scheme” with respect to “S.K.O.”. Therefore, the nonacceptance of the declaration of the petitioner by the respondents does not suffer from any manifest error of law.
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