Paper cess included in education cess base where the levy is legally a duty of excise and collected as such.

Paper cess, though described as a cess under the Industries (Development and Regulation) Act, 1951, was treated as a duty of excise in law because it was levied and collected as such by the Department of Revenue. On that basis, it formed part of the aggregate duties of excise for computing education cess. The challenge to its inclusion failed, and the base for education cess was held to cover such levies when they are legally duties of excise and are collected accordingly.

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Issues: Whether paper cess, being a cess levied under the Industries (Development and Regulation) Act, 1951, formed part of the aggregate duties of excise for the purpose of computing education cess.

Analysis: The relevant charging provision for education cess contemplated calculation on the aggregate of duties of excise levied and collected by the Department of Revenue. The Board circular also confined the computation to duties that were both levied and collected as duties of excise/customs by the Department of Revenue. Paper cess was shown to be a duty of excise levied and collected as a cess for industrial development under Section 9 of the Industries (Development and Regulation) Act, 1951. On that basis, it was treated as excise duty in law and includible in the base for education cess.

Conclusion: Paper cess was correctly held includible while computing education cess, and the Revenue's challenge failed.

Final Conclusion: The adjudication affirmed that a cess which is, in law, a duty of excise and is levied and collected as such must be taken into account for education cess computation.

Ratio Decidendi: For computing education cess, all levies that are legally duties of excise and are levied and collected as such by the Department of Revenue are includible in the taxable base, even if they are described as a cess.

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