Double tax on tobacco is OK! The High Court upheld the Centre’s decision

Bangalore: The High Court has upheld the central government’s decision to levy National Disaster Contingency Tax (NCCD) along with excise duty on various types of tobacco products including beedis and cigarettes.

Justice M. heard the petitions filed by Ghodawat Packers LLP and five others challenging the imposition of double taxation. I. A single member bench headed by Arun passed this order.

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After hearing the arguments, the bench upheld the Centre’s decision of double taxation and dismissed the petition. NCCD is a surcharge. Also, apart from excise duty, it is a duty that can be levied independently’, the bench said.

Imposing NCCD along with excise duty on tobacco and tobacco products is a matter of public policy of the government. The government has the power to levy taxes in that way. Therefore, the court will not interfere in this matter.

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The Central GST Board considers levying excise duty on tobacco and tobacco products. Also taxed under the provisions of CGST. Therefore, the bench clarified that the Finance Ministry and the Central Tax Commissioner have all the powers to levy excise duty on tobacco and its products.

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Prior to the implementation of the Goods and Services Tax Act in 2017, the central government levied tax on tobacco products under the provisions of the Central Excise Act, 1944. But the Single Member Bench held that since the repeal of the Central Excise Act, the NCCD cannot be exempted from payment as determined under the Seventh Schedule of the Finance Act.

What is the contention of the tobacco companies?

From July 1, 2017 to July 6, 2019, there was no excise duty on tobacco and tobacco products. Tobacco companies had approached the court demanding that the order of double taxation should be cancelled. The central government had defended its decision in court saying it had the power to impose double taxation.

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