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2020 (10) TMI 804
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....s (KKC), all jointly referred to as the "Cess" against the Output GST Tax Liability after the switch over of Indirect Taxation System to GST Regime with effect from 01.07.2017, which GST (Goods and Services Tax) levy subsumed within its fold 16 indirect taxes earlier leviable like Excise Duty, VAT, etc. 2. It may be noted that all the aforesaid three types of Cess were imposed by different Finance Acts which are enumerated hereafter and Education Cess and Secondary and Higher Education Cess were also abolished much before the enforcement of GST Regime with effect from 01.07.2017 and during the contemporary period of the levy of the Cess, they were allowed to be set off or adjusted under CENVAT Credit Rules against the Output Cess Liability only and no cross utilisation of the Cess was allowed to be set off against the normal excise duty or customs duty payable by the Assessee, even though the Cess imposed under the Finance Act were collected in the form of Duty or Tax, as the case may be, by reading mutatis mutandis the provisions of those parent enactments. 3. The fine distinction between Cess, Tax and Duty will also be discussed hereafter. But, by way of introductory remark....
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....the amount of CENVAT credit 3[of eligible duties] carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed: Provided that the registered person shall not be allowed to take credit in the following circumstances, namely:- (i) where the said amount of credit is not admissible as input tax credit under this Act; or (ii) where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date; or (iii) where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government. 3. Inserted by the CGST (Amdt.) Act, 2018 (31 of 2018), dt. 30.8.2018, w.r.e.f. 1-7-2017. (2) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, credit of the unavailed CENVAT credit in respect of capital goods, not carried forward in a return, furnished under the existing law by him, for the period ending with th....
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....enefit of such credit by way of reduced prices to the recipient, be allowed to take credit at such rate and in such manner as may be prescribed. (4) A registered person, who was engaged in the manufacture of taxable as well as exempted goods under the Central Excise Act, 1944 (1 of 1944) or provision of taxable as well as exempted services under Chapter V of the Finance Act, 1994 (32 of 1994), but which are liable to tax under this Act, shall be entitled to take, in his electronic credit ledger, - (a) the amount of CENVAT credit carried forward in a return furnished under the existing law by him in accordance with the provisions of sub-section (1); and (b) the amount of CENVAT credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day, relating to such exempted goods or services, in accordance with the provisions of sub-section (3). (5) A registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respe....
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.... may be prescribed: Provided that if the registered person furnishes his return for the period ending with the day immediately preceding the appointed day within three months of the appointed day, such credit shall be allowed subject to the condition that the said return is either an original return or a revised return where the credit has been reduced from that claimed earlier: Provided further that the registered person shall not be allowed to take credit unless the said amount is admissible as input tax credit under this Act: Provided also that such credit may be transferred to any of the registered persons having the same Permanent Account Number for which the centralised registration was obtained under the existing law. (9) Where any CENVAT credit availed for the input services provided under the existing law has been reversed due to non-payment of the consideration within a period of three months, such credit can be reclaimed subject to the condition that the registered person has made the payment of the consideration for that supply of services within a period of three months from the appointed day. (10) The amount of credit under....
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....any cess which has not been specified in Explanation 1 or Explanation 2 and any cess which is collected as additional duty of customs under sub-section (1) of section 3 of the Customs Tariff Act, 1975 (51 of 1975)]. 1. Inserted by CGST (Amdt.) Act, 2018 (31 of 2018), dt. 30.8.2018, w.r.e.f. 1.7.2017. 8. Rule 117 of the CGST Rules, 2017, providing of furnishing of Form No.GST TRAN-1 in terms of Section 140 is also quoted below for ready reference: Rule 117. Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day.- (1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1, duly signed, on the common portal specifying therein, separately, the amount of input tax credit of eligible duties and taxes, as defined in Explanation 2 to section 140, to which he is entitled under the provisions of the said section: Provided that the Commissioner may, on the recommendations of the Council, extend the period of ninety days by a further period not exceeding ninety days. Provided fu....
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....is not in possession of any document evidencing payment of central excise duty. (ii) The input tax credit referred to in sub-clause (i) shall be allowed at the rate of sixty per cent. on such goods which attract central tax at the rate of nine per cent. or more and forty per cent. for other goods of the central tax applicable on supply of such goods after the appointed date and shall be credited after the central tax payable on such supply has been paid: Provided that where integrated tax is paid on such goods, the amount of credit shall be allowed at the rate of thirty per cent. and twenty per cent. respectively of the said tax; (iii) The scheme shall be available for six tax periods from the appointed date. (b) The credit of central tax shall be availed subject to satisfying the following conditions, namely:- (i) such goods were not unconditionally exempt from the whole of the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 or were not nil rated in the said Schedule; (ii) the document for procurement of such goods is available with the registered person; (iii) The registered perso....
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....mplementation of the Act, the Central Board of Indirect Taxes and Customs hereby directs the following: 3.1 The CENVAT credit of service tax paid under section 66B of the Finance Act, 1994 was available as transitional credit under section 140(1) of the CGST Act and that legal position has not changed due to amendment of section 140(1) on account of following reasons: i) The amendment in provisions of section 140(1) and the explanations to section 140 need to be read harmoniously such that neither any provision of the amendment becomes otiose nor does the legislative intent of the amendment get defeated. ii) The intention behind the amendment of section 140(1) to include the expression "eligible duties" has been indicated in the "Rationale/ Remarks" column (at Sl. No. 37) of the draft proposals for amending the GST law which was uploaded in the public domain for comments. It is clear that the transition of credit of taxes paid under section 66B of the Finance Act, 1994 was never intended to be disallowed under section 140(1) and therefore no such remark was present in the document. iii) Under tax statutes, the word "duties" is used inter....
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....rsalised quality basic education. The said provisions of Sections 91 to 95 in Chapter VI of Finance Act, 2004 are also quoted below for ready reference. "91. Education Cess. - (1) Without prejudice to the provisions of sub-section (11) of section 2, there shall be levied and collected, in accordance with the provisions of this Chapter as surcharge for purposes of the Union, a cess to be called the Education Cess, to fulfil the commitment of the Government to provide and finance universalised quality basic education. (2) The Central Government may, after due appropriation made by Parliament by law in this behalf, utilise, such sums of money of the Education Cess levied under sub-section (11) of section 2 and this Chapter for the purposes specified in sub-section (1), as it may consider necessary. 92. Definition. The words and expressions used in this Chapter and defined in the Central Excise Act, 1944 (1 of 1944), the Customs Act, 1962 (52 of 1962) or Chapter V of the Finance Act, 1994 (32 of 1994), shall have the meanings respectively assigned to them in those Acts or Chapter, as the case may be. 93. Education Cess on excisable goods. - (1) The E....
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.... of the Customs Tariff Act, 1975 (51 of 1975); and (d) the Education Cess on imported goods. (2) The Education Cess on imported goods shall be in addition to any other duties of customs chargeable on such goods, under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force. (3) The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Education Cess on imported goods as they apply in relation to the levy and collection of the duties of customs on such goods under the Customs Act, 1962 or the rules or the regulations, as the case may be. 95. Education Cess on taxable services. - (1) The Education Cess levied under section 81, in the case of all services which are taxable services, shall be a tax (in this section referred to as the Education Cess on taxable services) at the rate of two per cent, calculated on the tax which is levied and collected under section 66 of the Finance Act, 1994 (32 of 1994). (2) The Ed....
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....cation Cess. 12. Similarly, the Central Government imposed Krishi Kalyan Cess by Section 161 of the Finance Act, 2016, with effect from 1st June 2016 at the rate of 0.5% of the Service Tax payable on taxable services, for the purpose of financing and promoting initiatives to improve agriculture or any other purpose relating thereto. The said Krishi Kalyan Cess was repealed with effect from 01.07.2017 only by the Taxation Laws (Amendment) Act, 2017. 13. The levy of Education Cess and Secondary and Higher Education Cess was however dropped and deleted by the Finance Act, 2015 by Section 153, of which, Section 95 of the Finance Act 2004, Education Cess was omitted and by Section 159, Section 140 of the Finance Act, 2007 was also omitted. The Krishi Kalyan Cess was however abolished only with effect from 01.07.2017 vide Taxation Laws (Amendment) Act, 2017. But, there was no claim of CENVAT Credit with regard to Krishi Kalyan Cess and the reason which apply to Education Cess and Secondary and Higher Education Cess will equally apply to Krishi Kalyan Cess also for the purpose of Section 140 of the CGST Act. The relevant provisions of Central Excise Act and CENVAT Rules for avail....
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....Since the Revenue Authority under GST negatived the said claim and asked the Assessee to reverse the CENVAT Credit in the form of Education Cess and Secondary and Higher Education Cess, the Assessee approached this Court by way of writ petition which came to be allowed by the learned Single Judge by the order impugned before us now. 17. Before coming to our reasons for the conclusion that the Assessee is not so entitled to carry forward unutilised Education Cess and Secondary and Higher Education Cess as CENVAT Credit to be utilised against the output GST liability under the provisions of CGST Act, in terms of Section 140 thereof, let us note the rival contentions raised before us. Contentions raised on behalf of Revenue/Appellant 18. Ms.Aparna Nandakumar, learned counsel for the appellant/ Revenue submitted that with the levy of Cess having been dropped in the year 2015 by the Finance Act, 2015, the unutilised amount of Education Cess and Secondary and Higher Education Cess which could not be set off by the Assessee during the contemporary period prior to 30th June 2017, cannot be allowed to be carried forward under the transitory provisions of Section 140 of the CGST Act....
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....um of money collected as Education Cess would be utilised for the purpose specified in sub section (1) after due appropriation made by Parliament by law. b. Similarly Secondary and Higher Education Cess(hereinafter referred as SHE Cess) was introduced vide Finance Act 2007. Section 136 of chapter VI of the Finance Act 2007, provided that Secondary and Higher Education Cess would be levied and collected as surcharge and would be utilised to provide for the purpose of Secondary and Higher Education after due appropriation made by Parliament by law in this behalf. c. Similarly Finance Act 2016 provided for the levy and collection of Krishi Kalyan Cess (hereinafter referred as KKC) to meet the needs of the agriculturists and farmers. Thus the three cesses were introduced for specific purposes and the same was collected by the Central Government and utilised only for those identified specified purposes. d. The first proviso to Rule 3(7)(b) of the CENVAT Credit Rules 2004 provided that the credit of the Education Cess on excisable goods and on taxable services could be utilised either for payment of Education Cess on excisable goods or for the payment ....
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....ording to the newly added provisos the following position emerged :- i. The credit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in the factory of manufacture of final products on or after 01.03.2015 could be utilised for the payment of central excise duty. ii. The 50% balance credit of Education Cess and Secondary and Higher Education Cess paid on capital goods received in the factory of manufacture of final products in the financial year 2014-15 can be utilised for payment of central excise duty. iii. The CENVATCredit pertaining to Education Cess and Secondary and Higher Education Cess paid on input services received by the manufacture of final products on or after 01.03.2015 could be utilised for the payment of central excise duty. iv. The CENVATCredit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in the premises of the provider of output service on or after the 1st day of June, 2015 can be utilized for payment of service tax on any output service. v. The 50% balance credit of Education Cess and Secondary and Higher Education Cess....
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....ect from 01.07.2017 cannot be treated as revival or extension of limitation when the claim itself becomes a dead claim. The appellant relies on the observations of the Hon'ble Supreme Court in the case of UOI v. Uttam Steels Ltd. (2015) 13 STC 209. LEGAL PROPOSITION II :- Cess is Not "Eligible Duties": a. Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess may have the colour of duty or tax at first blushper se, but is not tax or excise duty per se. Contrary to the levy of tax and duty which are compulsory exactions of money from the public for public purposes enforceable by law and is not payment for services rendered, the cess is levied with a quid pro quo element for services rendered. b. The appellants/department places reliance on the Judgment of the Hon'ble Supreme Court in The Commissioner, Hindu Religious Endowments, Madras v. Sri LakshmindraThirthaSwamiar of Sri Shirur Mutt MANU/SC/0136/1954 : AIR 1954 SC 282Matthews v. Chicory Marketing Board (1938) 60 C.L.R. 263Dewan Chand Builders & Contractors v. UOI [2012 1 SCC 101], Tamil Nadu Minerals Limited Vs. The Joint Commissioner of Income Tax, Company Range-III [ (2019)310C TR....
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....ion Cess has been credited into the Consolidated Fund of India and no separate fund has been created. The respondent-assessee relies on the CAG report for the year 2014-15 and 16-17. In this connection the appellant-department submits as follows:- * Even though the collection of SHECess was credited into the Consolidated Fund of India it was not expended or spent for general public purpose and was awaiting proper Parliamentary approval for creation of a separate fund. * On 16.08.2017, the Union Cabinet accorded the approval for creation of the non-lapsable separate account called as Madhyamik &Uchhatar Shiksha Kosh (MUSK) into which all the proceeds of the Secondary and Higher Education Cess would be credited. * In this connection the appellant herein files type set no 4 containing305th report of the Department-Related Parliamentary Standing Committee on Human Resource Development and the press release by the Press Information Bureaudated 16.08.2017. * Para 2.8 of the standing committee report gives the details of this specific fund called Madhyamik &Uchhatar Shiksha Kosh (MUSK). * Sub para (a) of para 2.8 states that the procee....
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....f the Larger Bench of the Hon'ble Supreme Court in Unicorn Industries V UOI(2019 370 ELT 3) as held that education cess, secondary and higher Education cess, NCCD etc which are all additional levy are independent in nature and do not take the colour of basic levy. The larger bench of the Hon'ble Supreme Court has held in two Division Bench judgments of the Hon'ble Supreme Court in SRD Nutrients Private Limited v. Commissioner of Central Excise, Guwahati, MANU/SC/1407/2017 : (2018) 1 SCC 105 and the decision of this Court in Bajaj Auto Limited v. Union of India and Ors., MANU/SC/0417/2019, decided on 27.3.2019 as per incuriam as the two Division Bench judgments had not followed the law laid down by the larger bench of the Hon'ble Supreme Court in UOI v. Modi Rubber. c. It is submitted that although the decisions of the Larger Bench of the Hon'ble Supreme Court arose in the context of exemption to the basic central excise, customs duty and whether the benefit of the exemption could be extended to the benefit of Education Cess, Secondary and Higher Education Cess, NCCD etc. , the law laid down by the Hon'ble Supreme Court can be extended to the present case of transition of C....
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.... intact and in such circumstances the Hon'ble Supreme Court observed in para 6 of the Judgment, that the right accrued to the assessee on the date they paid the tax on the raw material or the inputs would continue until the facility available thereto gets worked out or until those goods existed. Thus the Hon'ble Supreme Court presupposed the existence of the facility for working out the earned credit and the existence of the output element for the duty for utilisation of the credit. In the present case however, the levy of the Education Cess, Secondary and Higher Education Cess had been taken away in the year 2015 itself. In other words, the facility for working out the earned credit has been taken away and hence the possibility of continuing the right has also ceased. The Hon'ble Delhi High Court in the case of Cellular Operators Association of India v UOI[Reported in 2018 (14) GSTL 522, (2018) 51 GSTR 338 (Del), MANU/DE/0710/2018] has distinguished the Hon'ble Supreme Court Eicher Motors Ltd. v. UOI [ 1999 (106) ELT 3 (SC) of the Hon'ble Supreme Court. LEGAL PROPOSITION V:- Doctrine of Purposive interpretation: a. Section 140 which deals with transition of CENVA....
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.... Hence the above three cesses were not subsumed along with the 14 taxes and duties on the date of inception of the GSTEnactment and hence transition of the same is not possible.Thus, the intention of the draftsman is discernible that the CENVATCredit of the cesses was never intended to be transitioned. e. The respondent contention that the absence of the words "of eligible duties"in Section 140(8) would mean that even CENVAT Credit pertaining to cessescould be transitioned, is wholly untenable. It is submitted that as all the other subsection using the phrase "CENVATCredit "of eligible duties" or CENVAT credit "of eligible duties and taxes",the absence of the phrase "eligible duties" in subsection 8 is nothing but an unintentional oversight by the draftsman and not intentional. f. On a harmonious construction of entire section 140 which deals withtransitioning of only the subsumed duties and taxes,a literal interpretation by the respondent to make subsection (8) as a standalone provisionwill only lead to absurdity. g. To support this contention, the appellants herein relies on the decision of the Hon'ble Supreme Court in Dilip S. Dhanukar Vs. Kotak Mahind....
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....d on behalf of Respondent/Assessee 21. On the other hand, the learned counsel for the respondent Assessee, Mr.Raghavan Ramabadran, supported the order of the learned Single Judge and urged that as per CENVAT Rules, 2004, the Assessee had already taken or availed the credit of the Education Cess and Secondary and Higher Education Cess paid by him on the inputs and therefore, the right to utilise the same against the Output Tax Liability was a vested and indefeasible right of the Assessee and could not be taken away by the Legislature when a switch over was made to GST Regime with effect from 01.07.2017. 22. Elaborating his arguments, he submitted that the present Assessee provides Countrywide Technical Services and Call Centre facilities to its customers, on a centralised registration under the provisions of CGST Act and therefore, in terms of Section 140(8) of the CGST Act, it was entitled to avail credit of the amount of CENVAT credit as defined in CENVAT Rules, 2004 against its Output Tax Liability even under the GST Regime. He submitted that the amendment to Section 140(1) by CGST (Amendment) Act, 2018 with retrospective effect from 01.07.2017 by insertion of words "of eli....
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....endment) Act, 2018 insofar as it amended Explanations 1 and 2 to Section 140 were not yet enforced and would be so enforced from a date which was yet to be notified and therefore, the Assessee's claim under Section 140(8) of the Act could not be defeated taking help of Explanation 3 as well. Explanation 3 was inserted in Section 140 also by CGST (Amendment) Act, 2018, with retrospective effect from 01.07.2017 when GST Regime was made operational. 25. The learned counsel for the respondent Assessee also relied upon the case laws which will be discussed hereafter. 26. The learned counsel for the Assessee also filed his written submissions and the same is taken on record and it is extracted as under, which we have considered. WRITTEN SUBMISSIONS ON BEHALF OF THE 1 s t R ESPONDENT (ASSESSEE) Issue involved: Can CENVAT credit of Education Cess ('Edu Cess'), Secondary & Higher Education Cess ('SHE Cess') and Krishi Kalyan Cess ('KKC') (collectively referred to as 'Cesses') which are validly availed and lying unutilized as per the last return filed for the period ending 30th June 2017, be transitioned into the GST regime? Respondent Assessee's....
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.... last Returns filed and also credit in respect of inputs lying in stock as on 01.07.2017. It is not covered under Section 140(1). 140(5) It covers a situation of goods in-transit, invoices in transit and the like where the duty/tax has been paid under the erstwhile laws and the actual receipt of inputs/ input services is after introduction of GST. It grants credit in respect of those duty/tax paid documents within a period of 30 days from receipt. It is not covered under Section 140(1). 140(6) It covers a situation wherein the registered person was paying duty based on capacity of manufacture, taxes under composition scheme and the like but has chosen to discharge GST liability at normal rates. It grants credit in respect of inputs lying in stock as on 01.07.2017. It is not covered under Section 140(1). 140(7) It provides for distribution of credit availed by Input Service Distributor in respect of services received prior to GST. It is not covered under Section 140(1). 140(8) It provides for transition of CENVAT credit in respect of centralized registered person under the Finance Act, 1994. It is not covered under Section 140(1) according to the assessee. ....
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....dit shall not be allowed unless it is eligible as an Input Tax Credit under GST. It is an admitted position that second Proviso is not attracted in the present case. Further, third Proviso to Section 140(8) of the CGST Act states that such credit may be transferred to any of the registered persons having the same PAN for which centralized registration was obtained under the existing law. A.10 Explanation to Section 143 of the CGST Act states that the term 'CENVAT credit' shall have the same meaning as assigned to it under Central Excise Act, 1944 ('Excise Act') or the rules made thereunder for the purpose of the Chapter on transitional provisions. A.11 Cenvat Credit Rules, 2004 ('CCR', in short) was framed under the powers conferred by Section 37 of the Central Excise Act, 1944 ('Excise Act'). Rule 3(1) of CCR is the provision allowing persons to take (avail) CENVAT credit. It enumerates the various duties and taxes that can be taken as CENVAT credit. Education Cess and Secondary and Higher Education Cess are enumerated under clause (vi) and (via) respectively. Further, as per Rule 3(1a) of CCR, Krishi Kalyan Cess can also be taken as CENVAT credit. Hence, all the....
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.... interpretation ought to be adopted. Further reliance is also placed on CST v. Modi Sugar Mills Ltd. AIR 1961 SC 1047 and Ind-Swift Laboratories Ltd. case (supra), which was held in the context of CENVAT Credit itself. A.16 Further, it is submitted that the assessee has all along maintained its claim under Section 140(8) and never had forsaken it. It is not the case of the Appellant/Department that the assessee does not fall under Section 140(8). In any case, even assuming without conceding that the said claim was forsaken, reliance is placed upon Hon'ble Supreme Court decision in Share Medical Care v. UOI 2007 (209) ELT 321 (SC) to advance the argument that there is no estoppel in claiming the benefit at a later stage. It was held therein that even if an applicant does not claim benefit at initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage. B. Alternatively, transitional credit is valid under Section 140(1). B.1 Section 140(1) of the CGST Act states that a person registered both under the existing law and GST, shall be allowed to take, in his electronic credit ledger, credit of the amount of 'CENVAT Cred....
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.... were levied on manufactured goods based on the powers conferred under Entry 84 of Union List, Seventh Schedule to the Constitution. The same, prior to 101st Constitutional Amendment Act, reads as follows: "Duties of excise on tobacco and other goods manufactured or produced in India except- (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry." B.8 Hon'ble Supreme Court in the case of Governor Generalin Council v. Province of Madras 1954 SCR 1046 [paragraph 23 in Hingir-Rampur decision at page 98 in Assessee Respondent's paperbook dated 30th September 2020] has held that a duty of excise is primarily a duty levied on manufacturer or producer in respect of the commodity manufactured or produced. It is on account of this reason that the charging Section of Edu Cess and SHE Cess on excisable goods under Finance Act 2004 and Finance Act, 2007 levy it as duties of excise. The Impugned Cesses are levied as tax and not as fee. B.9 It is further s....
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....on that can be drawn from these cases at best is that Cesses levied under Finance Acts are not Basic Excise Duty. The assessee also admits to this legal position and therefore, reference to these decisions do not advance the case of either side in this Writ Appeal. Explanation 2 and 3 to Section 140 are not attracted. B.12 It is submitted that Explanation 2 to Section 140 defines the expression 'eligible duties and taxes'. The said definition is irrelevant for both Section 140(1) and 140(8) as the same is not employed therein. Further, the amendment sought to be made under the Amendment Act to extend the application of the definition to Section 140(1), has not been notified in respect of this Explanation 2 as well. B.13 Further, Explanation 3 to Section 140 clarifies that the expression 'eligible duties and taxes' does not include any Cess not mentioned in Explanation 1 and Explanation 2. This Explanation 3 insertion to Section 140 of CGST Act has been notified. However, as stated earlier, since the expression 'eligible duties and taxes' is not employed either in Section 140(1) and Section 140(8) and Explanation 3 being only in the nature of explaining th....
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....India C.5 Supplementing this submission, reference is next made to the treatment of the impugned Cesses collected by the Central Government with the aid of provisions in the Constitution and Comptroller & Auditor General of India ('CAG') Reports. C.6 As per Article 266(1) of the Constitution, all revenues collected by the Central Government shall form part of the Consolidated Fund of India. As per Article 266(2), all public monies collected shall be credited to Public Account of India. As per Article 266(3), no money collected in Consolidated Fund of India can be appropriated except with the authority of law and for the purposes and in the manner mentioned in the Constitution. Therefore, all taxes are credited into Consolidated Fund of India and used through an appropriation law passed. Whereas, any Cess collected as fee is collected in a specific public account for the purposes mentioned and does not go into the Consolidated Fund of India. Further, as per Article 114(3) of the Constitution, no money can be withdrawn from the Consolidated Fund of India without an appropriation made under law in accordance with Article 114. C.7 The CAG Reports relied upon ....
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....ture of taxes and not fees, even though it is not an excise duty or service tax per se. It has also been the consistent stand of the Assessee Respondent that the impugned cesses are not Excise Duties per se but only duty of excise. Nomenclature is not relevant for determining nature of levy. C.13 Reliance is also made on Vijayalakshmi Rice Mill &Ors. V. CTO (2006) 6 SCC763 wherein it has been held that nomenclature is not relevant for determining whether a Cess is a tax or a fee [paragraphs 14 & 15 at page 195 of paperbook dated 30th September 2020]. As an illustration, reference can be made to Goods and Services Tax (Compensation to States) Act, 2017. Even though it is termed and collected as Cess, the preamble to the said Act has no semblance of a Cess levy. The said Preamble reads as, 'to provide for compensation to the States for the loss of revenue arising on account of implementation of the goods and services tax..'. Thus, it is levied purely as a revenue generation measure, though nomenclatured as a Cess. C.14 In light of the above, EC, SHE Cess and KKC are in the nature of tax/duty only and not in the nature of fee. D. CENVAT Credit valid....
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....n such as Rule 57F (4A) of the Central Excise Rules, 1944. This was worked out based on the Hon'ble Supreme Court decision in Eicher Motors (supra) (judgment dated 28.01.1999), wherein Section 37 of the Excise Act was amended to bring in Section 37(xxviii) which conferred power on the Government to notify lapsing of credit. This was amended with retrospective effect from 16.03.1995 (through Finance Act, 1999) to take care of the lacunae pointed out in the Eicher Motors case. Unlike the above, the Government has not exercised its powers under Section 37(xxviii) of the Excise Act to lapse the CENVAT credit of EC, SHE Cess and KKC lying unutilized. In absence of the same, there cannot be any implied lapse. D.6 Hence, the argument of the Appellant Department that the lapsing of CENVAT Credit of Cesses has worked out itself without any exercise of power under Section 37(xxviii) of Excise Act is not in line with the Eicher Motors case. D.7 It is an admitted position that no Rule has been framed by the Central Government under Section 37(xxviii) of the Excise Act for lapsing of unutilized CENVAT Credit of Impugned Cesses. D.8 In light of the above, it is submitt....
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.... already availed within the time-limit prescribed under CCR. Hence, the said decision is not applicable. E.5 The latter case is on the issue of rebate wherein, again the assessee did not claim it within the time-limit. Both these decisions do not deal with a right that has legally vested already.Hence, the same are not applicable. Hon'ble Delhi High Court decision in Cellular Operators Association v. Union of India 2018 14 GSTL 522 (Del.) is not applicable to the facts of the present case. E.6 Edu Cess and SHE Cess was levied by the Central Government. As stated above, Edu Cess and SHE Cess paid by a service provider/ manufacturer on their input services/inputs, were made eligible as CENVAT credit as per Rule 3(1)(vi) & (via) of the CCR. Rule 3(7) of CCR provided for utilization of CENVAT credit of Edu Cess and SHE Cess for payment of output Edu Cess and SHE Cess respectively. However, vide Notification 15/2015-C.E dated 01.03.2015, the Central Government exempted levy of Education Cess and Secondary and Higher Education Cess w.e.f. 01.06.2015. Therefore, as on 01.06.2015, the CENVAT credit of Education Cess and Secondary and Higher Educ....
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.... impost is slightly different from Tax or Duty, even though it may be collected in the form of Taxes or Duty under the parent law with which the charging provisions of Cess under the same Act or separate Act as they are read and applied mutatis mutandis, like Central Excise and Customs Duty Act. Even though the imposition and collection of Cess may be loosely termed as Tax or Duty, the collection of Cess remains distinct, inasmuch as Cess amount collected by the Government is liable to be spent for the avowed and dedicated purpose for which such imposition was made which is usually reflected in the name of the imposition itself like Education Cess, Secondary and Higher Education Cess etc. Mere facility of taking credit of Input Cess paid on Input goods or services just to avoid the cascading effect on the multiple transactions in the series does not militate or alter the character of the imposition of Cess itself. Like any other indirect taxes like Sales Tax, VAT, Excise Duty, etc., the removal of the cascading effect of Taxation in multiple transactions in series is provided by the Legislation to collect such taxes in a reasonable proportion to the value of the transactions, by re....
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....Service Tax leviable under Section 66B of the Finance Act, 1994 in respect of inputs and input services received on or after appointed day, while Explanation 1 talks of inputs held in stock on the appointed day 01.07.2017. 33. The distinction between Explanation 1 and Explanation 2 is that while Explanation 1 was intended to apply for the input Eligible Duties in respect of stocks and inputs contained in semi-finished or finished goods held in stock as on 01.07.2017, the specified 8 taxes and duties were applicable in respect of inputs and services received on or after 01.07.2017, the appointed day under GST Law. The addition of words "and Taxes" with "Eligible Duties" in Explanation 2 appears to be only on account of addition of "Service Tax" in Explanation 2 which specifies eight duties and taxes for set off. 34. Referring to Sub-section (5), which uses the terms "Eligible Duties and Taxes" will make this purpose of inserting Explanation 2 in Section 140 clear because Sub-section (5) only permits such credit to be taken even after such input services are paid before the appointed date of 01.07.2017, but invoices in respect of them are received after the said appointed day o....
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....ry and Higher Education Cess for the purpose of carry forward and set off under Section 140 is specifically provided in Explanation 3, which is clearly applicable to gather the legislative intent, irrespective of piecemeal enforcement of Explanations 1 and 2 by the Legislature. Explanation 3 has its own force and application and does not have a limited application only via the route of Explanation 1 and Explanation 2. The Departmental Circular dated 02.01.2019, quoted above, in our opinion, rightly clarified this position with reference to Explanation 3 to Section 140 of the Act. 37. Sub-section (8) of Section 140 provides for a registered person having centralized registration under the existing law shall be allowed to take in his Electronic Credit Ledger, the credit of amount of CENVAT Credit carried forward in the Return furnished under the existing law by him in respect of the period ending with the day immediately preceding the appointed day. The Proviso requires such registered person to furnish Return and the Second Proviso further provides that registered person shall not be allowed to take credit unless the said amount is admissible as Input Tax Credit under CGST Act. ....
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....Cess in the Electronic Ledger does not better its claim in any manner. 40. Admittedly, since the cross utilization of Education Cess and Secondary and Higher Education Cess was not allowed against Excise Duty and other duties under existing law prior to GST Regime and they could be set off only against the Output Education Cess and Secondary and Higher Education Cess liability, once the levy itself ceased and dropped in 2015, the question of their carry forward and utilization becomes only academic. Sub-section (8) of Section 140 and for that other matter, any of the Sub-sections of Section 140 are not the provisions in watertight compartments and do not operate in silos and a harmonious reading of various Sub-sections of Section 140, together with the three Explanations at the end of Section 140, has to be made by the Court to give it a purposeful meaning for transition of the Input Tax Credit, against Output GST Liability. The different Sub-sections of Section 140 only identify the class of Assessee; but a common thread of entitlement to carry forward and set off runs through them, of course, subject to Explanations 1, 2 and 3 appended to Section 140 of the Act. If one careful....
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....ducation Cess and Secondary and Higher Education Cess which could not be utilised against the Output Education Cess and Secondary and Higher Education Cess Liability, while the said impost was in force prior to Finance Act, 2015, became a dead claim in the year 2015 itself and therefore, there was no question of allowing a carry forward and set off after a gap of two years against the Output GST Liability with effect from 01.07.2017. 43. What we have stated above is supported by the recent judgment of Hon'ble Supreme Court in the case of Unicorn Industries v. Union of India [decided on 6th December 2019 reported in (2020) 3 SCC 492] rendered after the judgment of the learned Single Judge dated 05.09.2019 impugned before us and therefore, the same could not be brought to the notice of the learned Single Judge. 44. The Hon'ble Supreme Court, in the case of Unicorn Industries v. Union of India [(2020) 3 SCC 492] followed the earlier decision in Union of India v. Modi Rubber Limited [(1986) 4 SCC 66] and also held earlier two judgments of the Supreme Court by two Judges Bench as per incuriam and concluded that a Notification containing an exemption from payment of basic duty of e....
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....as questioned on the ground that it provided for limited exemption only under the Acts referred to therein. There is no reference to the Finance Act, 2001 by which NCCD was imposed, and the Finance Acts of 2004 and 2007 were not in vogue. The notification was questioned on the ground that it should have included other duties also. The notification could not have contemplated the inclusion of education cess and secondary and higher education cess imposed by the Finance Acts of 2004 and 2007 in the nature of the duty of excise. The duty on NCCD, education cess and secondary and higher education cess are in the nature of additional excise duty and it would not mean that exemption Notification dated 9-9-2003 covers them particularly when there is no reference to the notification issued under the Finance Act, 2001. There was no question of granting exemptions related to cess was not in vogue at the relevant time posed later on vide Section 91 of the 2004 Act and Section 126 of the 2007 Act. The provisions of the 1944 Act and the Rules made thereunder shall be applicable to refund, and the exemption is only a reference to the source of power to exempt NCCD, education cess, secondary and ....
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....d of for the purpose of manufacture of further goods." 46. The above judgment, with great respect, is not applicable to the case before us for two reasons. Firstly, there is nothing like Rule 57F(4A) under challenge before us, nor the said judgment of the Supreme Court dealt with a case of Cess, but was dealing with a Modvat credit of Excise Duty itself paid on the inputs which was to be utilized against the Output Excise Duty on the finished goods. That right, obviously so long as Modvat Rules existed, could not be altered as was done in the form of Rule 57F(4A) and which was quashed by the Hon'ble Supreme Court. Here, we are concerned with the imposition of Cess under different enactments like Finance Acts which held the field for a particular period only and even ceased to operate before GST Regime was enforced on 01.07.2017 and the question of their transition as input credit in the new GST Regime is involved before us. 47. When the Cess could not be adjusted even against the normal Excise Duty under the CENVAT Rules, the question of applying the ratio of Hon'ble Supreme Court judgment in the case of Eicher Motors cannot arise. The said judgment is therefore distinguishab....
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....the Input Cenvat Credit in respect of Education Cess and Secondary and Higher Education Cess to the extent of unutilised amount lying in its Electronic Ledger was a dead claim and it became infructuous in the hands of the Assessee. 50. The distinction between the Cess, Fees, Tax and Duty was elaborately discussed by the Constitution Bench of the Hon'ble Supreme Court in the case of Hingir Rampur Coal Limited v. State of Orissa [AIR 1961 SC 459] and we find it useful to quote paragraphs 9 to 13 of the said judgment. "9. The first question which falls for consideration is whether the levy imposed by the impugned Act amounts to a fee relatable to Entry 23 read with Entry 66 in List II. Before we deal with this question it is necessary to consider the difference between the concept of tax and that of a fee. The neat and terse definition of tax which has been given by Latham, C. J., in Matthews v. Chicory Marketing Board (1) is often cited as a classic on this subject. "A tax", said Latham, C. J., "is a compulsory exaction of money by public authority for public purposes enforceable by law, and is not payment for services rendered". In bringing out the essential features of ....
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....ticular cess levied by a statute amounts to a fee or tax would always be a question of fact to be determined in the circumstances of each case. The distinction between a tax and a fee is, however, important, and it is recognised by the Constitution. Several Entries in the Three Lists empower the appropriate Legislatures to levy taxes; but apart from the power to levy taxes thus conferred each List specifically refers to the power to levy fees in respect of any of the matters covered in the said List excluding of course the fees taken in any Court. 10. The question about the distinction between a tax and a fee has been considered by this Court in three decisions in 1954. In The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt the vires of the Madras Hindu Religious and Charitable Endowments Act, 1951 (Madras Act XIX of 1951), came to be examined. Amongst the sections challenged was Section 76(1). Under this section every religious institution had to pay to the Government annual contribution not exceeding 5% of its income for the services rendered to it by the said Government; and the argument was that the contribution th....
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....ould thus be seen that the tests which have to be applied in determining the character of any impugned levy have been laid down by this Court in these three decisions; and it is in the light of these tests that we have to consider the merits of the rival contentions raised before us in the present petition. 13. On behalf of the petitioners Mr. Amin has relied on three other decisions which may be briefly considered In P.P.Kutti Keya v. The State of Madras, the Madras High Court was called upon to consider, inter alia, the validity of Section 11 of the Madras Commercial Crops Markets Act 20 of 1933 and Rules 28(1) and 28(3) framed thereunder. Section 11(1) levied a fee on the sales of commercial crops within the notified area and Section 12 provided that the amounts collected by the Market Committee shall be constituted into a Market Fund which would be utilised for acquiring a site for the market, constructing a building, maintaining the market and meeting the expenses of the Market Committee. The argument that these provisions amounted to services rendered to the notified area and thus made the levy a fee and not a tax was not accepted by the Court. Venkatarama A....
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....law. However, it also means an assessment or levy. Depending on the context and purpose of levy, cess may not be a tax; it may be a fee or fee as well. It is not necessary that the services rendered from out of the fee collected should be directly in proportion with the amount of fee collected. It is equally not necessary that the services rendered by the fee collected should remain confined to the persons from whom the fee has been collected. Availability of indirect benefit and a general nexus between the persons bearing the burden of levy of fee and the services rendered out of the fee collected is enough to uphold the validity of the fee charged. As per Sinha, J. (dissenting), conceptually fee and tax stand on different footings; whereas the element of tax is based on the principle of compulsory exaction, the concept of fee relates to the principle of quid pro quo. The validity of tax cannot, therefore, be upheld on the ground that the same would be a fee, State of W.B. v. Kesoram Industries Ltd., (2004) 10 SCC 201. 21.4.The word "cess" is used in Ireland and is still in use in India although the word rate has replaced it in England. It means a tax and is gene....
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....se; tallage. The general principles of taxation are these: - (1) The subjects of every estate ought to contribute to the support of the Government as nearly as possible in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation. (2) The tax which each individual is bound to pay ought to be certain and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor and to every other person. (3) Every tax ought to be levied at the time or in the manner, in which it is most likely to be convenient for the contributor to pay it. (4) Every tax ought to be so contrived as both to take out and keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the State. Taxes are either direct or indirect. A direct tax is one that is demanded from the very persons who are intended or desired to pay it. Indirect taxes are those which are demanded from one person, in t....
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....st. The word "impost" in its general sense means a tax or tribute or duty and may be on persons or on goods. In a special sense it means a duty on imported goods and on merchandise, Sea Customs Act, S. 20(2), In re, AIR 1963 SC 1760, 1784: (1964) 3 SCR 787: (1964) 1 ITJ 671 25.FEES 25.1.Is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay. These are undoubtedly some of the general characteristics, but as there may be various kinds of fees, it is not possible to formulate a definition that would be applicable to all cases, Commr., Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, AIR 1954 SC 282: 1954 SCR 1005: (1954) 1 MLJ 596: 20 Cut LT 250. 25.2.Property peculiar; reward or recompense for services. Also an estate of inheritance divided into three species: (1) fee-simple abs....
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....CR 302. 26.2.In fees there is always an element of "quid pro quo" which is absent in a tax. Two elements are thus essential in order that a payment may be regarded as a fee. In the first place, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly. But this by itself is not enough to make the imposition of a fee, if the payments demanded for rendering of such services are not set apart or specifically appropriated for that purpose but are merged in the general revenue of the State to be spent for general public purposes, Jagannath Ramanuj Das v. State of Orissa, AIR 1954 SC 400: 1954 SCR 1046. 27.Fee and Tax 27.1.Between a tax and a fee there is no generic difference. Both are compulsory exactions of money by public authorities; but whereas a tax is imposed for public purposes and is not and need not, be supported by any consideration of service rendered in return, a fee is levied essentially for services rendered and as such there is an element of quid pro quo between the person who pays the fee and the public authority which imposes it. If specific services are rendered to a specific area o....
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....isation of the tax which is levied or imposed. Collection of tax is normally a stage subsequent to the levy of the same. The enforcement of levy could only mean realisation of the tax imposed or demanded, Somaiya Organics (India) Ltd. v. State of U.P., (2001) 5 SCC 519. 30.Levy and collection - While the expression "levy" may include both the process of taxation as well as the determination of the amount of tax or duty, the expression "collection" refers to actual collection of the payable duty or the tax, as the case may be. Since the taxable event for attracting excise duty or countervailing duty is the manufacture or import of excisable goods into the State, the charge of incidence of duty stands attracted as soon as the taxable event takes place and the facility of postponement of collection of duty under the Act or the rules framed thereunder, can in no way affect the incidence of duty on the imported goods, S.K. Pattanaik v. State of Orissa, (2000) 1 SCC 413. 31.Levy, Imposition and Assessment The term "levy" appears to be wider in its import than the term "assessment". It may include both "imposition" of a tax as well as assessment. The term "imposition" is....
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....) 4 SCC 43. 33.4.In the transaction of patent, royalty is a payment to a patentee by agreement on every article made according to his patent or to an author by publisher on every copy of his book sold or to the owner of mineral for the right of working the same on every tone or other weight raised, Pradeep C. Mody v. Sashikant C. Mody, AIR 1998 Bom 351. 33.5.Payment to a patentee by agreement on every article made according to his patent; or to an author by a publisher on every copy of his book sold; or to the owner of minerals for the right of working the same on every ton or other weight raised. [Wharton's Law Lexicon.] 33.6.In its primary and natural sense "royalty", in the legal world, is known as the equivalent or translation of jura regalia or jura regia. Royal rights and prerogatives of a sovereign are covered thereunder. In its secondary sense the word "royalty" would signify, as in mining leases, that part of the reddendum, variable though, payable in cash or kind, for rights and privileges obtained, Inderjeet Singh Sial v. Karam Chand Thapar, (1995) 6 SCC 166. 34.Royalty and compensation "Royalty" means remuneration paid to....
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....r period of limitation comes into force. A number of judgments of this Court have recognised the aforesaid proposition. Thus, in S.S. Gadgil v. Lal and Co., MANU/SC/0122/1964 : AIR 1965 S.C. 171, this Court stated:- "13. As we have already pointed out, the right to commence a proceeding for assessment against the assessee as an agent of a non-resident party under the Income Tax Act before it was amended, ended on March 31, 1956. It is true that under the amending Act by Section 18 of the Finance Act, 1956, authority was conferred upon the Income Tax Officer to assess a person as an agent of a foreign party under Section 43 within two years from the end of the year of assessment. But authority of the Income Tax Officer under the Act before it was amended by the Finance Act of 1956 having already come to an end, the amending provision will not assist him to commence a proceeding even though at the date when he issued the notice it is within the period provided by that amending Act. This will be so, notwithstanding the fact that there has been no determinable point of time between the expiry of the time provided under the old Act and the commencement of the amending Act. The ....
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.... Concession of ITC is available on certain conditions mentioned in this Section. (c) One of the most important condition is that in order to enable the dealer to claim ITC it has to produce original tax invoice, completed in all respect, evidencing the amounts of input tax. 12. It is a trite law that whenever concession is given by statute or notification etc. the conditions thereof are to be strictly complied with in order to avail such concession. Thus, it is not the right of the 'dealers' to get the benefit of ITC but its a concession granted by virtue of Section 19. As a fortiori, conditions specified in Section 10 must be fulfilled. In that he, we find that Section 10 makes original tax invoice relevant for the purpose of claiming tax. Therefore, under the scheme of the VAT Act, it is not permissible for the dealers to argue that the price as indicated in the tax invoice should not have been taken into consideration but the net purchase price after discount is to be the basis. If we were dealing with any other aspect de hors the issue of ITC as per the Section19 of the VAT Act, possibly the arguments of Mr.Bagaria would have assumed some rele....
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.... cross utilization of Education Cess and Secondary and Higher Education Cess towards Excise Duty and Service Tax was never permitted and the Delhi High Court repelled the challenge of the Cellular Operators Association of India to the Notification dated 29th October 2015, which was challenged on the ground that the extended benefit of that Notification was not given to the Cellular Operators and the credit accumulated on account of Education Cess and Secondary and Higher Education Cess should be allowed to them against the payment of Service Tax leviable and payable on digital Communication Services. 56. Distinguishing the decision of Hon'ble Supreme Court in the case of Eicher Motors Limited, as we have also found above, the Division Bench of the Delhi High Court in a judgment authored by Hon'ble Justice Sanjiv Khanna (As His Lordship then was), it was held that on a holistic reading of the entire Scheme, the petitioners could not be allowed to take cross utilization against Excise Duty and the contention that it was a vested right or claim of the Assessee could not be accepted. The Court also found that the decision of the Hon'ble Supreme Court in the case of Eicher Motors, wa....
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....ub-heading 8540.12, though the proviso had provided for credit of duty in respect of inputs lying in stock or contained in finished goods lying in stocks. It was held that the said scheme of credit of input tax, in view of amended provision, could not be made applicable to goods which had already come into existence and under which the assessee had claimed credit facility. As noticed above, in the present case, credit of EC and SHE could be only allowed against EC and SHE and could not be cross- utilized against the excise duty or service tax. In fact, what the petitioners seek is an amendment of the scheme to allow them to take cross utilization of the unutilized EC and SHE upon the two cesses being withdrawn against excise duty and service tax, though this was not the position even earlier. Both EC and SHE were withdrawn and abolished. They ceased to be payable. In these circumstances, it is not possible to accept the contention that a vested right or claim existed and legal issue is covered against the respondents by the decision in Eicher Motors Limited and Another (supra) and Samtel India Limited (supra). The said decisions are distinguishable and inapplicable. ....
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....but a procedural restriction was introduced which, in our opinion, is permissible in law. Therefore, in our opinion, the law laid down by this Court in Eicher case (1999) 2 SCC 361 does not apply to the facts of these cases. This is also the position with regard to the judgment of this Court in CCE v. Dai Ichi Karkaria Ltd.(1999) 7 SCC 448." 57. The Hon'ble Supreme Court in the case of Osram Surya held that Second Proviso inserted in the Central Excise Rules Rule 57G with effect from 29.06.1995 does not affect the substantive or vested right of the manufacturer to take credit, but only introduces a procedural restriction which is legally permissible by providing a time limit of six months. Paragraphs 7 and 8 of the said judgment are also quoted below for ready reference. "7. Having heard the arguments of the parties and after considering the Rule in question, we think that by introducing the limitation in the said proviso to the Rule, the statute has not taken away any of the vested rights which had accrued to the manufacturers under the Scheme of Modvat. That vested right continues to be in existence and what is restricted is the time within which the manufacturer has ....
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.... accrued prior to the date of introduction of this proviso. In our opinion, this argument is not available to the appellants because none has questioned the legality or the validity of the Rule in question, therefore, any argument which in effect questions the validity of the Rule, cannot be permitted to be raised. The argument of the appellants that there was no time whatsoever given to some of the manufacturers to avail the credit after the introduction of the Rule also is based on arbitrariness of the Rule, and the same also will have to be rejected on the ground that there is no challenge to the validity of the Rule." Likewise before us also, there is no challenge to any provision of CGST Act or Rules made thereunder. 58. We may also briefly add one more reason as to why we cannot subscribe to the view taken by the learned Single Judge and affirm it. GST Law, by enactment of respective laws by the Parliament and States and creation of GST Council to subsume the 16 indirect taxes which were in vogue prior to 01.07.2017 was a watershed moment in the taxation reforms in India. The following 16 indirect taxes which were hitherto leviable were subsumed in the new GST ....
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....med in the new GST Laws, either by the Parliament or by the States. Therefore, the question of transitioning them into the GST Regime and giving them credit under against Output GST Liability cannot arise. The plain scheme and object of GST Law cannot be defeated or interjected by allowing such Input Credits in respect of Cess, whether collected as Tax or Duty under the then existing laws and therefore, such set off cannot be allowed. 61. For these reasons also, in our opinion, the learned Single Judge, with great respects, erred in allowing the claim of the Assessee under Section 140 of the CGST Act. The main pitfalls in the reasoning given by the learned Single Judge are (a) the character of levy in the form of Cess like Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess was distinct and stand alone levies and their input credit even under the Cenvat Rules which were applicable mutatis mutandis did not permit any such cross Input Tax Credit, much less conferred a vested right, especially after the levy of these Cesses itself was dropped; (b) Explanation 3 to Section 140 could not be applied in a restricted manner only to the specified Sub-sections of Se....