Leviability of cess on tractors under Tractor Cess Rules – CBEC Clarifies
THE High Court of Himachal Pradesh in case of Indo Farm Tractors & Motors Ltd. V/s UOI - had held that Automobile Cess Rules are not applicable for imposition of cess on tractors. The said judgement was upheld by the Hon'ble Supreme Court in CWP No. 895/2005.
A reference was made to the Ministry of Heavy Industry & Public Enterprises, the administrative ministry responsible for Automobile cess, to take suitable action consequent to the Court judgement. The Ministry of Heavy Industry & Public Enterprises has informed that cess on tractors is leviable under the Tractor Cess Rules, 1992 and related notifications issued by the adminstrative ministry. However, existence of these rules were not brought to the notice of the Hon'ble Courts and the Hon'ble Court has passed the order without having any occasion to consider these rules. In view of the said situation, the opinion of the Law Ministry was sought. Law Ministry has clarified that since the decision of the Hon'ble High Court was not rendered in the context of Tractor Cess Rules, 1992, therefore, it is legally correct to collect the tractor cess as per the law. Further, the Hon'ble High Court has also held that the cess on tractors can be recovered if the rules are framed by the Government. As the rules are already in existence, there is no bar on collection of cess. In this connection, it is mentioned that Ministry of Heavy Industry & Public Enterprises has clarified that the Tractor Cess rules, 1992 were notified vide Notification No. S.O. 55(E) dated 19.01.1993 and these are still in existence. Further, cess at the rate of 1/8% ad valorem was levied vide Notification No. 662(E) dated 06.09.1985.
So Board clarifies that tractors are chargeable to tractor cess in terms of the Tractor Cess Rules, 1992 read with the IDRA Act, 1951. And Board wants necessary steps to be taken to collect the cess.
The High Court order came in July 2007. Why did the Board wait for nearly three years to issue this clarification? And what happens to those who had not paid the cess all these years? Will they be charged with suppression, fraud and intent to evade tax?
CBEC Circular No. 916/06/2010-CX dated: March 04, 2010