Bengaluru: The National Calamity Contingent Duty (NCCD) and excise duty on tobacco products have been upheld by the Karnataka High Court. The order was issued by Justice M. I. Arun in response to petitions filed by Ghodawat Packers LLP and five others challenging the imposition of NCCD.
The petitioners argued that since there was no excise duty on tobacco and tobacco products from July 1, 2017, to July 6, 2019, NCCD could not be levied. Therefore, NCCD should not have been levied during that time.
Prior to the Central Goods and Services Act of 2017, the Central Excise Act of 1944’s tax rules applied to tobacco goods (read with Central Excise Tariff Act, 1985).
The court said that NCCD is a surcharge and a type of excise duty that can be levied independently of the excise duty as contemplated under the provisions of the Fourth Schedule to the Central Excise Act, 1944, noting that repealing the Central Excise Act does not help ease the petitioners from paying NCCD as determined under the Seventh Schedule to the Finance Act. Therefore, the court concluded, the imposition of NCCD in the absence of the levy of excise duty cannot be considered as bad by law.
The court added that it would not interfere since the levy of excise duty on tobacco and tobacco-related items is a matter of public policy. In addition to taxing tobacco and tobacco products in compliance with the CGST’s rules, the CGST itself contemplates the imposition of excise duty. There is no error. The court decided that the respondents, the Ministry of Finance and the Commissioner of Central Tax, are authorised to impose both the CGST and the excise duty on tobacco and tobacco-related products.
