0*10% not equal to 0; tax laws running against basic mathematics
The cardinal multiplication rule in mathematics stipulates that anything multiplied by zero gives end result as zero. However, Larger Bench of the Supreme Court held that cess / surcharge (levied as a percentage of primary tax) needs to be paid even if the primary tax is Nil. To stem tide of litigation, CBIC issued Circular clarifying that for Customs law, SWS will be Nil where Customs Duty is Nil. Bombay High Court relied on the said Circular and also pronounced decision in favor of taxpayers. The issue becomes more complex with Government’s view being different for BCD being exempt on account of duty-credit scrips and other cases.
Whilst both the Circular and High Court judgment favor the taxpayers, they run contrary to Supreme Court decision. Through this Article, our Partner Mr. Deepak Suneja and Associate Mr. Rishabh Galhotra have deliberated upon the canvas of the controversy and shared their views.
Please click on the below link to read our article titled ‘0*10% not equal to 0; tax laws running against basic mathematics’.
NITYA I Article 111 I 0 10 not equal to 0 tax laws running against basic mathematics