TaxTMI 
TaxTMI 
2024 (1) TMI 1158
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....petitioner along with an equivalent penalty imposed under Section 11AC of the Central Excise Act, 1944 read with Clean Energy Cess Rules, 2010 on the alleged closing stock of coal on June 30, 2017 and all the purported proceedings there under and/or relating thereto and/or in pursuance thereof and to act according to law; And; (ii) For issuance of appropriate writ(s)/ order(s), direction(s) for any Injunction restraining the respondents and each of their servants and/or agents and/or assignees to forebear from giving any effect and/or further effect to and/or acting on the basis of and/or in furtherance of the purported order dated 29/09/2020 and/or any purported proceedings there under and/or relating thereto and/or in pursuance thereof; And; (iii) During the pendency of this present writ application, it is humbly prayed that the operation of the order dated 29/09/2020 may be stayed. 3. The brief facts of the case as it appears from the writ application is that the petitioner is a subsidiary of Coal India Limited and is a Category-I Mini Ratna Company since 2007. In the instant writ petition the petitioner has challenged the order dated 29.09....
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....t Rs. 100 per tonne. However, Notification No. 3/2010-Clean Energy Cess dated 22.06.2010 exempted duty in excess of Rs. 50 per tonne. Therefore, Cess was payable at Rs. 50 per tonne Cess paid at Rs. 50 for goods lying is stock on 30.06.2010 and removed subsequently 2. 11.07.2014 Notification No. 3/2010 was rescinded vide Notification No. 20/2014-CE dated 11.07.2014. Therefore, Cess was payable at Rs. 100 per tonne. Cess paid at Rs. 100 for goods lying is stock on 10.07.2014 and removed subsequently. 3. 01.03.2015 Vide Section 160 of Finance Act, 2015, the rate in the Tenth Schedule of Finance Act, 2010 was increased to Rs. 300. However, Notification No. 1/2015-Clean Energy Cess dated 01.03.2015 exempted duty in excess of Rs. 200. Therefore, Cess was payable at Rs. 200 Cess paid at Rs. 200 for goods lying is stock on 28.02.2015 and removed subsequently 4. 01.03.2016 Vide Section 235(ii) of the Finance Act, 2016, the rate in the Tenth Schedule of the Finance Act was increased to Rs. 400 and the Notification No. 1/2015-Clean Energy Cess was rescinded vide Notification No. 1/2016-Energy Cess dated 01.03.2016. Therefore, Cess was payable at Rs. 400 ....
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....022) 7 SCC 260, Paras 41-41.3). Thus, in absence of the Rules, there is no machinery provisions inter alia to demand, collect and recover Cess. Mr. Laxmi Kumaran contended that the impugned order confirms the demand of Cess under Section 11A of Central Excise Act, 1944 and Rule 6(5) of the Cess Rules. Firstly, Notification No. 2/2010-Clean Energy Cess which borrows Section 11A of the Central Excise Act, 1944 stood repealed by virtue of repeal of Chapter VII of the Finance Act, 2010. Secondly, the Rule 6(5) of the Cess Rules also stood repealed. Therefore, the impugned order has no legs to stand in the eye of law. The entire demand is without any authority of law and ex facie unsustainable. It is further submitted that in absence of machinery provisions for payment, collection, demand etc., the levy of Clean Energy Cess is unsustainable. He further relied upon the decision rendered in the case of Commissioner of Income Tax, Bangalore v. B.C. Srinivasa Setty, (1981) 2 SCC 460, Para 10, Tata Sky Ltd. V. State of MP, (2013) 4 SCC 656, Paras 30-31. 7. In support of ground No. III, learned counsel submitted that the demand in the present case has been confirmed under Section 11A....
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....ergy Cess has been diverted for the objectives of GST Compensation Cess. Thus, GST Compensation Cess and Clean Energy Cess cannot be levied on the same transaction. 9. In support of ground No. V, learned counsel submitted that the respondent no. 3 has confirmed the demand by invoking extended period of limitation. The impugned order notes that there was a deliberate intent to evade the taxes. Learned counsel contended that the present case is an interpretational issue and petitioner was paying GST Compensation Cess with a bona-fide belief that Clean Energy Cess was not payable. Further, the petitioner has been filing regular returns under GST law for all the supplies of coal made after introduction of GST. Petitioner was not filing returns under Clean Energy Cess Rules with a bona fide belief that Clean Energy Cess was not payable. It has been submitted that these facts were in the knowledge of the respondents; however, despite said facts being in the knowledge of the respondents, show cause notice was issued almost after two years from the date Clean Energy Cess was repealed. Therefore, issuance of show cause notice dated 15.03.2019 is clearly an afterthought. Since, the ins....
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....oal as on 30-06-2017 was payable in terms of the saving clause mentioned above. Therefore, the contention of the petitioner that the interpretation placed on the Act of 2017 [Taxation Law (Amendment) Act, 2017] saving clean energy cess is inherently faulty, is not sustainable in eye of law. The issue of payment of Clean Energy Cess on the stocks of coal as on 30-06- 2017 has been settled by the Hon'ble Apex Court in the case of (Mohit Minerals) Pvt Ltd 2018(17) GSTL 561 (SC). He further contended that the exemption Notification No. 12/2017-Central Excise dated 30-06-2017 exempts all excisable goods [except petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel, tobacco and tobacco products] from the whole of the duty of excise leviable thereon under the said Central Excise Act 1944 that have been manufactured on or before 30th June, 2017 but not cleared from the factory of production before the 1st July, 2017. But the Clean Energy Cess is a 'Cess' leviable under Section 83(3) of the Finance Act, 2010 and it is not a duty of excise leviable under Central Excise Act, 1944. The Clean Energy Cess was neither exempted vide notification No. 12/2017-....
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....cannot sustain. Relying upon the aforesaid submissions, learned ASGI prays for dismissal of the instant writ application. 11. Having heard learned counsel for the rival parties and after going through the documents annexed with the respective affidavits and the averments made therein following issues arise for consideration before us:- (i) Whether the Revenue is entitled to levy Cess under Clean Energy Cess' 2010 which has been repealed by the GST Compensation Cess under the Goods & Services (Compensation to States) Act, 2017 ? (ii) If the Revenue is entitled to levy Cess under Clean Energy Cess' 2010 then as to whether in the facts and circumstance of this case the Revenue can take recourse of first proviso to section 11A(1)/ section 11A(4) on the ground of suppression, fraud etc. ? (iii) If the Assessee is liable to pay Cess under Clean Energy Cess' 2010 then as to whether he is also liable to pay interest & penalty over the Cess amount ? 12. At the outset, it is specified that as per Article 265 of the Constitution, no tax shall be levied or collected except by the authority of law. It may be noted that Entry 84, List 1 of the Constitution was....
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.... of the provisions of the Central Excise Act, 1944 (1 of 1944), relating to levy of and exemption from duty of excise, refund, offences and penalties, confiscation and procedure relating to offences and appeals shall, with such modifications and alterations as it may consider necessary, be applicable in respect of cess levied under sub-section (3)." 13. From bare perusal of the aforesaid section, it appears that Section 83(3) of Chapter VII of Finance Act, 2010 itself provides for "Levy", "Collection" and "Rates of Tax" at Tenth Schedule. As per Section 83, the levy of duty is on the production of Coal. The taxable event is production of coal and not its removal. Further, the Finance Act, 2010 itself provides for "Collection" and "Rates of Tax". Rules 4 & Rule 6 of Cess Rules specifies the procedure that the Cess is payable by 5th of the second month. The Rule does not specify that the Cess is to be paid at the rate applicable at the time of removal. Therefore, prima-facie it appears that respondent had the power to levy and collect Clean Energy Cess on the coal already produced and lying in stock as on 30.06.2017. To substantiate the aforesaid view, few aspects is to be seen....
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....ction 3 cannot be read as shifting the levy from the stage of manufacture or production of goods to the stage of removal. The levy is and remains upon the manufacture or production alone. Only the collection part of it is shifted to the stage of removal. Once this is so, the fact that the provisions of the Central Excise Act are applied in the matter of levy and collection of special excise duty cannot and does not mean that wherever the Central excise duty is payable, the special excise duty is also payable automatically. That is so as an ordinary rule. But insofar as the goods manufactured or produced prior to 1-3-1978 are concerned, the said rule cannot apply for the reason that there was no levy of special excise duty on such goods at the stage and at the time of their manufacture/production. The removal of goods is not the taxable event. Taxable event is the manufacture or production of goods. 13. In our opinion, the decision in Wallace Flour Mills [(1989) 4 SCC 592 : 1990 SCC (Tax) 10 : (1989) 44 ELT 598] does not lay down a contrary proposition - neither does it support the contention of Shri Vellapally. That was a case where the goods were excisable goods prior to ....
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....rom 1963 up to 1971 by various Finance Acts passed from time to time. It was discontinued from 1972 until 1978 when it was revived by the Finance Act, 1978. Thereafter, it was being levied from year to year by annual Finance Acts. The provisions of these Finance Acts, insofar as the levy of special excise duty is concerned, are identical. In the Finance Acts of 1987 and 1988, however, the rate of special excise duty was raised to ten per cent but then notifications were issued exempting the duty on all goods in toto. In other words, with effect from 1-3-1986, there was, in effect, no special excise duty until 28-2-1988. With effect from 1-3- 1988, the duty was again imposed @ 5%, while exempting certain essential commodities and other priority items from the said impost. We have held hereinabove that the goods manufactured/produced before 1-3-1978 but cleared on or after 1-3-1978 are not exigible to special excise duty. At the same time, we have also expressed the view that the goods manufactured/produced on or before 28-2- 1979 but cleared thereafter would be liable to pay the said duty at the rate and valuation in force as on 28-2-1979. In the light of the fact that the duty was ....
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....aforesaid contention of the Assessee's counsel is not applicable in the given facts and circumstances of this case, inasmuch as, Section 83(3) of chapter VII of Finance Act, 2010 itself provides for "levy", "collection" and "rates of tax" at tenth schedule. Thus, the judgment cited by learned counsel for the Assessee rendered in the case of Air India v. Union of India & Ors, (1994) 4 SCC 734, Para 6-8; Watson v. Winch, [1916] 1 K.B. 688] is not applicable in the given facts and circumstances of the case. At this stage, it is also pertinent to mention here that the decision relied upon by the learned counsel for the petitioner rendered in the case of Kolhapur Canesugar Works Ltd. V. Union of India (2000) 2 SCC 536 has been declared per in curium by the Hon'ble Apex Court in the case of Fibre Bords Pvt. Ltd., Banglore versus CIT Banglore, reported in (2015)10 SCC 333. 16. Further, the contention of the Assessee that Section 18(2) of the Taxation Laws Amendment Act, 2017 does not specifically save the Cess Rules and Notification No. 2/2010-Clean Energy Cess, dated 22.06.2010 (i.e., the Notification borrowing the provisions of Central Excise Act, 1944 for recovery, interest etc.); t....
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.... 2016. Answer 3.- The Compensation to States Act is not a colourable legislation. Issue 4 : Whether levy of Compensation to States Cess and GST on the same taxing event is permissible in law? 61. The petitioner elaborating his contention submits that as per Section 8 of the impugned legislation there shall be levied a cess on intra- State supply of goods and services as provided in Section 9 of the CGST Act whereas CGST Act has been enacted to levy tax as provided under Article 246-A of the Constitution. This is also true in respect of the cesses imposed on inter-State supplies of goods and services covered by Section 5 of the IGST Act, 2017. Therefore, on the same very transaction there cannot be two levies, one under CGST Act and another under impugned legislation as it would amount to double taxation as levy is on the same taxable event and same subject. Thus, there is an overlapping on law which is not permissible. The petitioner contends that goods and services tax being already imposed by three enactments of 2017 as noticed above imposition of States Compensation Cess is levied on the same taxing event and has overlapping effect. 62. The pr....
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....itions. In the above case the Government of Punjab had issued a notification under Section 90(4) of the Punjab Municipal Corporation Act, 1976 imposing tax at the rate of Rupee 1 per bottle on Indian made foreign liquor within the Municipal Corporation of Ludhiana. One of the contentions raised was that tax imposed is on sale, hence, beyond the Government power. In para 4 following was laid down : (SCC p. 144) "4. ... A feeble plea that the tax is bad because of the vice of double taxation and is unreasonable because there are heavy prior levies was also voiced. Some of these contentions hardly merit consideration, but have been mentioned out of courtesy to counsel. The last one, for instance, deserves the least attention. There is nothing in Article 265 of the Constitution from which one can spin out the constitutional vice called double taxation. (Bad economics may be good law and vice versa). Dealing with a somewhat similar argument, the Bombay High Court gave short shrift to it in Western India Theatres [Cantonment Board, Poona v. Western India Theatres Ltd., 1953 SCC OnLine Bom 13 : AIR 1954 Bom 261]. Some undeserving contentions die hard, rather survive after death. ....
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....y 2020. Since, the present case is an interpretational issue and petitioner was paying GST Compensation Cess with a bona-fide belief that Clean Energy Cess was not payable. Further, the petitioner has been filing regular returns under GST law for all the supplies of coal made after introduction of GST. Petitioner was not filing returns under Clean Energy Cess Rules with a bona fide belief that Clean Energy Cess was not payable. Further, these facts were in the knowledge of the respondents; however, despite said facts being in the knowledge of the respondents, show cause notice was issued almost after two years from the date Clean Energy Cess was repealed. Thus, as aforesaid, since the instant case involves an interpretational issue, therefore in such circumstances, no penalty under Section 11AC can be levied as demand of Cess under the extended period of limitation is unsustainable. Further, as the allegation of suppression and wilful intent to evade tax is baseless and incorrect, penalty under Section 11AC(1)(c) of the Central Excise Act, 1944 cannot be imposed. Reference in this regard may be made to the judgment rendered in the case of M/s. International Merchandising Comp....