Clean Environment Cess on closing stock removed after repeal found not payable; collection falls under GST compensation cess instead.

Whether a cess levy applies to goods in stock removed after repeal turns on accrual of liability before repeal and applicable transitional law. The repeal effective 01.07.2017 and the saving provision preserved only liabilities already accrued; liability under the earlier cess had not accrued for coal remaining in stock on 30.06.2017 and removed on or after 01.07.2017. Consequently collection after repeal is under the GST compensation cess regime and the prior demand for Clean Environment Cess was set aside with the appeal allowed in favour of the assessee.

---

---

Issues: Whether Clean Environment Cess under Section 83(3) of the Finance Act, 2010 is payable on closing stock of coal as on 30.06.2017 which was removed on or after 01.07.2017 after repeal of the levy.

Analysis: The issue turns on the effect of repeal of the cess levy under Section 83(3) of the Finance Act, 2010 by Section 18(1) of the Taxation Laws (Amendment) Act, 2017 w.e.f. 01.07.2017 and the operation of Section 18(2) of the Taxation Laws (Amendment) Act, 2017 preserving liabilities already accrued or incurred. The statutory framework distinguishes liabilities that had accrued or been incurred prior to repeal from removals occurring after the repeal date, and GST compensation cess became leviable w.e.f. 01.07.2017. On the facts, liability in respect of goods lying in stock on 30.06.2017 but removed on or after 01.07.2017 had not accrued under Section 83(3) prior to repeal; subsequent collection was under the GST compensation cess regime.

Conclusion: The demand of Clean Environment Cess confirmed by the impugned order is unsustainable and is set aside; the appeal is allowed in favour of the assessee.

Ratio Decidendi: Where a statutory cess is repealed effective from a date, the cess under the repealed provision is not payable on goods whose liability to cess had not accrued prior to repeal and which are removed only after the repeal date, provided an alternative cess applies from the repeal date.

---