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of <h1>Appellant's refund claim for Education Cess and SHE Cess rejected as cesses excluded from Section 140 CGST Act 2017 transitional credit</h1> <h3>M/s. Toyota Kirloskar Motor Pvt. Ltd. Versus Commissioner of Central Excise & CGST – Jaipur I</h3> M/s. Toyota Kirloskar Motor Pvt. Ltd. Versus Commissioner of Central Excise & CGST – Jaipur I - TMI Issues Involved:1. Refund of unspent Education Cess & Secondary and Higher Education Cess (SHE Cess).2. Legal provisions for refund under CGST Act, 2017 and Central Excise Act, 1944.3. Applicability of Section 142(3) of CGST Act, 2017.4. Interpretation of Rule 5 of CENVAT Credit Rules, 2004.5. Transitional provisions under Section 140 of CGST Act, 2017.6. Applicability of precedents and judicial decisions.Issue-wise Detailed Analysis:1. Refund of unspent Education Cess & Secondary and Higher Education Cess (SHE Cess):The appellant sought a refund of Rs. 11,63,244/- for the unspent amount of Education Cess & SHE Cess. The department observed that there is no legal provision for refunding the balance of Education Cess & SHE Cess in the Cenvat credit ledger. The original adjudicating authority rejected the claim for Rs. 8,41,387/- but sanctioned Rs. 3,21,857/- for the unspent amount in the Profit & Loss Account (PLA). Both the appellant and the department appealed this decision, which was dismissed by the Order-in-Appeal dated 22.01.2021.2. Legal provisions for refund under CGST Act, 2017 and Central Excise Act, 1944:The appellant argued that there is no statutory provision stating that the eligible Cenvat credit of Education Cess & SHE Cess lapses with the introduction of the CGST Act, 2017. They cited Section 142(3) of the CGST Act, 2017, which entitles cash refunds of such amounts. The department countered that the refund of Rs. 3,21,857/- was erroneously sanctioned and should be recovered, emphasizing that the PLA is an advance deposit of Central Excise duty, which falls under Section 11B of the Central Excise Act, 1944, prescribing a one-year time limit for refunds.3. Applicability of Section 142(3) of CGST Act, 2017:Section 142(3) of the CGST Act, 2017, states that any claim for a refund filed before, on, or after the appointed day should be disposed of according to the existing law, and the amount should be paid in cash. However, the provision must be read in conjunction with Section 11B of the Central Excise Act, 1944, which does not provide for the refund of cesses after they have been omitted.4. Interpretation of Rule 5 of CENVAT Credit Rules, 2004:Rule 5 of the CENVAT Credit Rules, 2004, allows the refund of unutilized credit only in cases where inputs are used in final products cleared for export. The rule does not permit refunds for any other reason. The Tribunal emphasized that the legislative intent must be interpreted as clearly expressed and cannot be extended to supply any assumed deficiency.5. Transitional provisions under Section 140 of CGST Act, 2017:Section 140 of the CGST Act, 2017, and its explanations specify the eligible duties and taxes that can be carried forward and adjusted against GST output tax liability. Education Cess and SHE Cess are not included in the list of eligible duties and taxes. Explanation 3 explicitly excludes any kind of cess from being carried forward under the transitional provisions.6. Applicability of precedents and judicial decisions:The Tribunal referred to multiple judicial decisions, including those of the Hon'ble Apex Court and High Courts, to support its conclusions. Notably, the Apex Court in Union of India and Ors. Vs. IndSwift Laboratories Limited emphasized that a taxing statute must be interpreted based on what is clearly expressed. The Tribunal also cited decisions that no equity or good conscience can influence fiscal codes without statutory provisions.Conclusion:The Tribunal upheld the order under challenge, denying the refund claim for the amount of Cenvat credit of Education Cess & SHE Cess paid prior to March 2015. The appeal was dismissed, affirming that the credit balances not transitioned to the GST regime shall lapse, and there is no provision for their refund under the existing laws. The judgment emphasized a strict interpretation of statutory provisions and transitional arrangements under the CGST Act, 2017.
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