BENGALURU: The Karnataka High Court has upheld the imposition of excise duty and National Calamity Contingent Duty (NCCD) on tobacco products. Justice M I Arun passed the order while dismissing petitions filed by Ghodawat Packers LLP and five others against the imposition of NCCD.
The petitioners contended that when excise duty is not levied, NCCD cannot be levied and there was no excise duty on tobacco and tobacco products from July 1, 2017 to July 6, 2019. Hence, NCCD should not have been levied during the said period.
Prior to Central Goods and Services Act, 2017, tobacco products were being taxed under the provisions of the Central Excise Act, 1944 (read with Central Excise Tariff Act, 1985). Noting that repealing of the Central Excise Act does not absolve the petitioners from paying NCCD as determined under the Seventh Schedule to the Finance Act, the court said that NCCD is a surcharge and a type of excise duty which can be levied independent of the excise duty as contemplated under the provisions of the Fourth Schedule to the Central Excise Act, 1944. Thus levy of NCCD in the absence of levy of excise duty cannot be considered as bad in law, the court said.
The court also said that the levy of excise duty on tobacco and tobacco products is a matter of public policy and therefore it would not interfere. The CGST itself contemplates levy of excise duty upon tobacco and tobacco products, apart from them being taxed under the provisions of CGST. There is no error. Thus the respondents -- Ministry of Finance and the Commissioner of Central Tax -- are entitled to levy CGST as well as excise duty on tobacco and tobacco products, the court ruled.