2010 (7) TMI 327 - AT - Service Tax

Tribunal Upholds Denial of Education Cess Refund Under Notification No. 41/07-S.T.

The Tribunal dismissed the appeals, upholding the Commissioner (Appeals) order that denied the refund of education cess. The Tribunal ruled that since ... Refund of education cess - exemption by way of refund - scope of exemption notifications - relation between service tax exemption and education cess - requirement of a specific notification to exempt cessRefund of education cess - exemption by way of refund - scope of exemption notifications - Whether education cess paid on service tax is refundable under Notification No. 41/2007-S.T. dated 6-10-2007 which grants exemption from service tax on specified taxable services. - HELD THAT: - The appellants sought refund of the education cess on the ground that Notification No. 41/2007-S.T. granted exemption from service tax and the education cess is levied on service tax and therefore refundable. The Tribunal held that the education cess was imposed under the Finance (No. 2) Act, 2004 and there is no notification under the Finance Act granting exemption of the education cess by way of refund. The Tribunal relied on its earlier decisions (including the consolidated orders in CCE v. Jindal Drugs and Others ) and on the Supreme Court authority relied upon by Revenue to the effect that, absent a specific notification exempting the cess, the cess is not covered by an exemption directed only at the underlying service tax. The Tribunal therefore rejected the contention that a notification exempting service tax ipso facto permits refund of the education cess when no separate exemption for the cess exists, and found no infirmity in the lower authority's disallowance of the refund of the education cess.Refund of the education cess is not admissible under Notification No. 41/2007-S.T. in the absence of any specific notification granting exemption of the education cess; the impugned orders disallowing the refund are upheld.Final Conclusion: Appeals dismissed; refund of education cess disallowed as there is no specific notification under the Finance Act exempting the education cess by way of refund. Issues involved:Refund of education cess under Notification No. 41/2007-S.T. dated 6-10-2007.Analysis:1. Appellant's Contention:The appellant filed appeals against the Commissioner (Appeals) order disallowing the refund of education cess. The appellant argued that education cess, being part of Service Tax, should be refunded under Notification No. 41/2007-S.T. dated 6-10-2007. They cited precedents like Banswara Syntex Ltd. and Vipor Chemicals Pvt. Ltd. to support their claim.2. Revenue's Contention:The Revenue argued that, similar to a previous case concerning Jammu & Kashmir, education cess refund is not admissible without a specific exemption notification. They referred to Tribunal decisions in cases like Gitanjali Industries and Kamakhya Cosmetics & Pharma Pvt. Ltd. to support their stance. The Revenue also highlighted specific notifications like No. 18/07, indicating the intention to grant exemptions.3. Decision:The Tribunal found that the appellant sought exemption for education cess refund under Notification No. 41/07-S.T. dated 6th October, 2007, which only exempted Service Tax. Since there was no specific notification exempting education cess, similar to past cases like CCEx. v. Jindal Drugs Ltd., the Tribunal dismissed the appeals. They cited the precedent set by the Supreme Court in Union of India v. Modi Rubber Ltd. to support their decision, emphasizing the need for a specific exemption notification for education cess refunds.In conclusion, the Tribunal upheld the impugned orders, stating that in the absence of a notification granting exemption for education cess, the refund is not admissible. The appeals were dismissed based on the established legal principles and precedents cited in the judgment.