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Karnataka High Court backs simultaneous levy of excise duty, GST on tobacco

Karnataka High Court backs simultaneous levy of excise duty, GST on tobacco

Karnataka High Court has upheld the constitutional validity of the imposition of central excise duty, national calamity contingent duty (NCCD) simultaneously with the goods and services tax (GST) on tobacco and tobacco products.

A two-judge bench, comprising justice Alok Aradhe and justice S Vishwajith Shetty, basically upheld the earlier order by a single bench of the court in this regard.


The court ruled that the taxable event for levy of excise duty would be manufacturing of tobacco and the tobacco products and for levy of GST, the taxable event would be supply of tobacco and tobacco products.

V.S. Products, a proprietary firm engaged in the manufacturing of tobacco and tobacco products, challenged the continuation of excise duty and NCCD even after introduction of GST from July one, 2017. Currently, excise duty at 0.5 per cent and NCCD at 25 per cent are imposed on tobacco. However, an abatement of 55 per cent is given which means the effective rate of taxation is 11.475 per cent. GST is levied on supply of tobacco products at 28 per cent and on tobacco leaves at 5 per cent. Besides, compensation cess at different rates is also levied.

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