TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1641
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....AT credit of duty/tax on inputs and input services used in such manufacture of final products. They had filed a refund application for the closing balance of Education Cess and Secondary & Higher education cess lying as on June 30, 2017, which could not be transitioned as input credit under GST regime, on various grounds mentioned in their refund application. The said amount was initially carried forward by the Appellants as transition credit under GST regime by filing Form TRAN-1 and subsequently reversed on being pointed out by the Audit Team that the same is not permissible. The Appellants in support of their claim for refund under Section 11B of the Central Excise Act had furnished requisite documents along with such refund application. The Appellants submitted that they had duly availed CENVAT Credit of EC, SHEC, and Krishi Kalyan Cess ("KKC"), legitimately paid on inputs/services prior to their abolition in 2015. As on June 30, 2017, closing balances of credit of such cesses were available in the CENVAT account of Appellants. However, Section 140 Central Goods and Services Tax Act, 2017 ("the CGST Act") did not permit carry-forward of these credits into Form TRAN-1. Consequen....
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....the earlier regime and exclusion of cesses from transitional provisions does not, in absence of express lapse provision, extinguish the balances. * Section 142(3) of the CGST Act further reinforces this position by expressly providing that all pending refund claims of CENVAT credit shall be disposed of under existing law and "any amount eventually accruing shall be paid in cash." 3.5 Thus, by the direct ratio of Eicher Motors, the accumulated balances of EC, SHEC, and KKC standing as on 30.06.2017, though not transferable to GST, remain vested rights of the Appellant and must be refunded in cash. 3.6 She also relies on other judicial precedent affirming such refund where utilisation is barred. In Slovak India Trading Co. v. CCE [2006 (201) E.L.T. 559 (Kar.), affirmed by Union of India v. Slovak India Trading Co. Pvt. Ltd. - 2008 (223) E.L.T. A170 (S.C.), wherein it was held that unutilised credit of cess/duty cannot be allowed to lapse and must be refunded when no further utilisation is possible, 3.7 This ratio has been consistently followed in Nu Vista Ltd., BHEL Bhopal, and other CESTAT decisions, which supports the appellant's case. 3.8 The Appellants had du....
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....ST Act specifically provide for cash refund of any amount of CENVAT credit as a transitional arrangement. 4. In the rejoinder filed subsequently, Ms Priyaka Goel, Ld counsel for KEI made the following further submissions : 4.1 Hon'ble Bombay High Court in the case of Combitic Global Caplet Pvt. Ltd. v. Union of India in Writ Petition No.729 of 2021 with W.P. No.1228 of 2021 [(2024) 20 Centax 144 (Bom.)], have held that Subsection (3) of Section 142 of the CGST Act very clearly says any amount eventually accruing shall be paid in cash and directed the departmental authorities/sanctioning authority for refunding the amount of duty refundable to the petitioner in cash instead of credit in CENVAT account.: 4.2 The SM Bench of Mumbai Tribunal, in the case of Toyota Kirloskar Motor Pvt. Ltd. Vs Pr. Commissioner of Central Tax, Pune GST-I (2025) 27 Centax 121 (Tri.-Bom) has held that the Edu Cess, SHE Cess and KK Cess held as closing balance as on 30.6.2017, are required to be granted by way of cash refund in terms of Section 142 (3) of the CGST Act 2017. 5. In view of the above submissions, the Ld counsel prays that the impugned order may be set aside and appeal may be allowe....
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.... Excise law for the month of June, 2017. The relevant ER-1 return had appropriate columns to reflect the ED as well as the SHE. The ED and SHE were introduced by the Finance Act of 2004 and 2007, respectively, and were to be levied and collected as duties of excise. 6.5 It is also to be noted that though both the Cesses were discontinued in the year 2015 there was no provision for their lapsing as has been provided in other types of cases under Rule 11(3)(ii) of the Cenvat Credit Rules, 2004. Limited cross utilization was allowed vide notification No.12/2015-CE(NT) dated 30-04-2015. Since all the excise duty including the cesses reflected in balance in the return of the Appellants as of June 2017 were all eligible duties and as per sub section (1) of section 140 of the CGST Act, 2017, the transition of all such duties should have been allowed in the Appellants' electronic credit ledger maintained under GST law. A point was raised during the hearing that "eligible duties" as defined in Explanation 1 to section 140 excludes all Cesses. The definition of "eligible duties" appearing in Explanation-1 cannot apply to sub section (1) of section 140 under which the Appellants were seeki....
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....3) of the CGST Act, 2017 under which the Appellants have sought refund of the Cesses. 7. In view of the above submissions, the Ld Counsel for the intervenor Lakshmi Cements, prays that the decision of Nu Vista may be held as the correct decision for the issue on hand. 8. Sri Z U Alvi appeared on behalf of the intervenor BHEL. After adopting the stand taken by the main appellant and the intervenor for Laxmi Cements, he places reliance on the following case law : 1. CCE Vs Ashok Ark. 2006(193) ELT 399 (Jhar) 2. U.O.I. Vs Slovak India Training Co Pvt Ltd. ELT-559(Kar) 3. U.O.I. Vs Slovak India Trading Co Pvt Ltd. 2008(223) ELT A 170(S.C.) 4. CCE Vs Motherson Sumi Electric Wire 2012 (278) ELT - 177 (KAR) 5. CCE Vs Jain Vanguard Polybutlene Ltd. 2010(256) ELT-523 (Bom) 6. CCE Vs Jain Vanguard 2015 (326) ELT A 86 (S.C.) 7. C.C.E & SR Vs Apex Drugs Intermediate 2015 (322) ELT- 834(A.P 8. Gauri Platiculture Pvt Ltd V/s CCE 2018 (360)ELT- 967 (Bom) 9. Welcure Drugs & Pharmaceuticals Vs CCE 2018(15) G.S.T.L 257(Raj) 10. Gauri Plasticulture Vs CCE 2019(30) GSTL 224 (BOM) 11. Rama Industrie....
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....nder Section 140 of CGST Act, and no way relatable to the refund under Section 142(3). Thus, no reliance can be considered of this judgment in the present case before the larger bench. 10.5 To be eligible for refund of cenvat credit under Section 142 (3) of the CGST Act, 2017, the following are the pre-conditions of refund in cash: (a) Sub-section (3) deals with claim for refund filed before, on or after the appointed day. (b) Refund application should be for refund of any amount of Cenvat credit, duty, tax, interest or any other amount paid under the existing law. (c) Such application is to be disposed of in accordance with the provisions of existing law. (d) If any amount eventually accrues the same is to be refunded in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of subsection (2) of Section 11B of the Central Excise Act, 1944. (e) It also provides that where any claim for refund of Cenvat credit is fully or even partially rejected, the amount so rejected shall lapse. (f) The second proviso provides that no refund shall be allowed of any amount of C....
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....on or after 01.03.2015. 10.12 Considering the above legal propositions, there remains no doubt that Section 142 (3) was not to revive lapsed and dead claim, specifically when such levy was extinguished in 2015 and in absence of any machinery provision available for claim of refund. 10.13 The following judgments have specifically rejected claim of refund of cenvat credit of education cess under Section 142 (3) of CGST Act: (a) The Kerala High Court in case of MUTHOOT FINANCE LIMITED Versus UNION OF INDIA {2024 (10) TMI 1658} on 18.10.2024 held that it is also apparent that the appellant did not seek a refund of the unutilised credit in 2015 or 2017, because the statutory rules in force then did not provide for are fund of unutilised credit of cess. (b) The Madras High Court in case of ASSISTANT COMMISSIONER OF CGST AND CENTRAL EXCISE, CHENNAI Versus SUTHERLAND GLOBAL SERVICES PVT. LTD. {(2023) 6 Centax 99 (Mad.) held that the credit of such Education Cess and Secondary and Higher Education Cess, 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 G....
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....ersus COMMISSIONER OF CENTRAL TAX AND CUSTOMS, GUNTUR {2020-TIOL-576-CESTAT-HYD} on 25.02.2020 ❖ BHARAT HEAVY ELECTRICALS LTD. Versus COMMR. OF C.T., SECUNDERABAD-GST {2020 (41) G.S.T.L. 465 (Tri. - Hyd.)} on 23.12.2019 ❖ UNITED SEAMLESS TUBULAR PVT. LTD. Versus CCT, RANGAREDDY GST {2019 (4) TMI 433} on 04.04.2019 10.15 . In the light of plethora of judgment of the High Courts holding ineligibility of refund of cenvat credit of education cess under provisions of Section 142 (3) of the CGST Act, 2017 without any conflicting decision of the High Courts in favour of the assessee; and further in light of various decisions of the Tribunals in the favour of the revenue. Thus, the reference may accordingly be decided in favour of revenue following the decision of Tribunal in NMDC Ltd, holding that no refund of cenvat credit of education cess under provisions of Section 142 (3) of the CGST Act, 2017 can be granted. 11. In view of the above submissions, the Ld AR prays that the decision of NMDC on the issue may be held as the correct one. 12. Heard the appellants KEI Industries Ltd [KEI for short], interveners Sri Laxmi Cements and BHEL. Considered t....
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....ner 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. Explanation 1. - For the purposes of 2[sub-sections (1), (3), (4)] and (6), the expression "eligible duties" means - (i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957; (ii) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, 1975; (iii) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975; (iv) [......] (Omitted ibid) (v) the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (....
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....) (5) (6) (7) (8) (9) (10) (11) 1. Opening balance 2 Credit taken on inputs on invoices issued by manufacturers 3. Credit taken on inputs on invoices issued by Ist or IInd stage dealers 19. The Board issued Circular No. 267/8/2018-CX8 dated 14-032018 and a check list was communicated to the field formation as to what credit was to be allowed under TRAN-1 and what was not to be allowed. As per para 4.1.1 of the said Circular, transition of Education Cess as well as Secondary and Higher Education Cess was not permitted. The relevant portion is extracted below : 4.Checks for Table 5(a): 4.1.1 Check 1: Verify that the credit has been taken against closing balance of CENVAT credit in ER-1/2/3 or ST-3. Credit can be taken only where the last return was filed and credit taken in Table 5(a) should not....
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....s' for transitioning. The net effect is that Column (7) - pertaining to Education Cess (goods) and Column (8) pertaining to SHE Cess (goods) and Column (10) Education Cess (Service) and Column (11) SHE cess (Service), are clearly excluded from the ambit of 'eligible duties and taxes'. Therefore, the emphasis laid by the intervener Laxmi Cements about non-notifying of the exclusion of Cesses under Explanation 3, though the second Circular No. 87/06/2019-GST Dated 2nd January, 2019 at Para 5 states that the same stands 'inserted', may not carry the case of the intervener any further. We take the view that since Explanation 1 and 2 have clearly specified the 'inclusive list of duties and taxes' that can be transitioned, by way excluding the Education Cess and SHE cess under these Explanations 1 and 2, would on its own would be sufficient to move them from the ambit of 'eligible duties and taxes', without having to go into the issue as to whether the exclusion in terms of Explanation 3 for Section 140 (5) was notified or not. 22. Approaching the eligibility for transitioning of Cesses from another angle, we find that proviso to Section 140 (1) reads as under: Provided that ....
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....used for discharge of the Education Cess and SHE cess only for the finished goods cleared / service provided. Similar provision has been specified for utilization of KKC only for discharge of KKC. The cross-utilization of the Education Cess and SHE cess and KKC with the normal Excise Duty Credit and Service Tax Credit is clearly prohibited, except for the brief initial exemption period, as admitted to by both the sides. 28. Therefore, when the Education Cess and SHE Cess on goods became fully exempt in view of Notifications issued under Section 5A of the CEA 1944, the utilization of the existing Education Cess and SHE Cess left as the closing balance as on 1.3.2015 also got fully blocked. Similar is the situation in respect of services being fully exempt from payment of Education Cess, SHE Cess and KKC whereafter the closing balance as on 1.6.2015 fully got blocked. 29. The appellants have vehemently argued about the 'indefeasible nature' of the Cenvat Credit and such credit being the 'Vested Right'. For this they have heavily relied on the decisions of Eicher Motors and Slovak India decisions of the Hon'ble High Courts and Supreme Court. Even as we begin to analyse the appli....
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....March, 2015 vide Notification Nos. 14/2015-C.E. and 15/2015-C.E. both dated 1st March, 2015. EC and SHE were also abolished and ceased to be payable on taxable services when Section 95 of Finance Act (No. 2) 2004 and Section 140 of Finance Act, 2007 were omitted by Finance Act, 2015. The omission was to take effect from 1st June, 2015 vide Notification No. 14/2015-S.T., dated 19th May, 2015. As a result, levy of EC and SHE on excisable goods was withdrawn with effect from 1st March, 2015 and in respect of taxable services with effect from 1st June, 2015. The petitioners do not have any grievance against the withdrawal or abolition of levy of EC and SHE. The contention is that EC and SHE, which were earlier imposed and then withdrawn from 1st March, 2015 and 1st June, 2015 for excisable goods and taxable services respectively, had been subsumed and included in the excise duty and Service Tax, and therefore, the amount lying in the credit towards EC and SHE should be available for availing CENVAT credit. This was not a case of abolition of EC and SHE, but the cesses were added and became part of the Excise Duty or Service Tax. Reliance is placed on the dictionary definition ....
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....in the financial year 2014-15 for payment of excise duty and Service Tax was also provided. These, as elucidated and explained, were new benefits and concessions granted, as cross utilization was earlier not permitted and allowed. Any new concession or benefit given, would not in law on stand-alone basis, confer a legal right to claim vested right to a concession or benefit which has not been granted. Of course, this amended provisions can be relied as a secondary fact to support the main argument that EC and SHE were subsumed. 9. The first aspect to be examined is the statutory effect of withdrawal of EC and SHE on excisable goods and taxable services with effect from 1st March, 2015 and 1st June, 2015 respectively, pursuant to the Finance Act, 2015. By Notification No. 14/2015-CE, dated 1st March, 2015, the Central Government in public interest had granted exemption to all goods falling in the First Schedule to the Central Excise Tariff Act, 1885 from whole of EC leviable thereon under Section 93 of the Finance (No. 2) Act, 2004. Similarly, vide Notification No. 15/2015-C.E., dated 1st March, 2015, the Central Government in public interest had exempted all goods falling ....
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....indicate that there would not be an increased tax burden being put on the payers or the consumers, as EC and SHE were being withdrawn. Noticeably, the two cesses and the excise duty and the Service Tax were always treated as different and separate and cross-utilization was never permitted. 12. It is no doubt true that the two cesses, in the present case, were in the nature of taxes and not fee, but it would be incorrect and improper to treat the two cesses as excise duty or Service Tax. They were specific cesses for the objective and purpose specified. A Constitution Bench of five Judges in Hingir-Rampur Coal Company Limited and Others v. State of Orissa and Others, (1961) 2 SCR 537 had elucidated that a cess can be in the form of a tax or a fee, though both are compulsory extraction of money. In case of a fee, there is an element of quid pro quo, while in tax this is not required, even if the tax being collected is used to constitute a specific fund, which does not become part of the Consolidated Fund, and its application can be regulated and confined to its purpose. 16. The decision in the case of Eicher Motors Limited and Another (supra) is distinguishable, for....
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....ade 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. 18. For the aforesaid reasons, we do not find any merit in the present writ petition and the same is dismissed. However, in the facts of the case, there would not be any order as to costs. 2019 (365) E.L.T. 773 (Raj.) [24-09-2018] BANSWARA SYNTE....
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....ith a further proof that its burden has not been passed on to the customers. 22. Even while amending the Rules of 2004 and substituting the proviso to Rule 3(7)(b) of the Rules of 2004, despite dispensing with the Education Cess and Secondary and Higher Secondary Education Cess, the Central Government has not thought it appropriate to provide for refund of the amount of such Cess, lying unutilised. In this view of the matter, in our considered view, the rule making authority has consciously not provided for refund of Cenvat credit. 27. In view of the discussion foregoing, we are of the considered opinion that the Tribunal has committed no error of law in holding that the appellant cannot claim cash refund or encashment of the unutilized and unavailed amount of Education Cess and Secondary and Higher Secondary Education Cess, lying in its credit. 34. Thus, we observe that in case of Cellular Operators Association Of India Versus Union Of India, the appellants sought permission for cross-utilization of the blocked Education Cess and SHE Cess [referred as option (b) specified above], which was held as untenable by the Hon'ble Delhi High Court. 35. In case of BA....
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....ecial Leave to Appeal (Civil) No. CC 467 of 2007 (Union of India v. Slovak India Trading Company Pvt. Ltd.) can be read as a declaration of law under Article 141 of the Constitution of India?" 9. The argument of Mr. M.H. Patil Learned Advocate appearing on behalf of the appellant in Central Excise Appeal No. 13 of 2007 and respondents in Central Excise Appeal Nos. 257 of 2007 and 28 of 2008 is that if one peruses Section 11B carefully, then, cash refund of accumulated credit lying un-utilised on account of closure of factory/stopping of activity/inability to use, is admissible. He invites our attention to Rule 5 of the Cenvat Credit Rules, 2004 to urge that this permits the unutilised credit to be claimed and the language thereof is, therefore, construed accordingly. Our attention is also invited to sub-rule (2) of Rule 11 to urge that a refund claim can always be made in the event the conditions laid down therein are set out. Thus, our attention is invited to Rule 5, Rule 11 and Rule 3 of the Cenvat Credit Rules, 2004 in this behalf. The Counsel would submit that the Cenvat credit is allowed as set out in Rule 3 and we must, therefore, construe the language of these provi....
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....that the Tribunal at Bengaluru relied upon the order of coordinate Benches of the Tribunal and against which, no appeals were preferred by the Revenue. The Learned Additional Solicitor General appeared on behalf of the Union of India and fairly conceded to the position that those decisions of the Tribunal have not been appealed against. In view of this concession of the Learned Additional Solicitor General, the Revenue's appeals were dismissed. 13. Mr. Patil would submit that in the case of Jain Vanguard Polybutylene Ltd. (supra), the Tribunal at Mumbai followed the view taken in the case of Slovak India Trading Company Pvt Ltd. (supra) and concluded that the refund of unutilised credit on account of closure of factory was permissible. It, therefore, allowed the appeal of Jain Vanguard/the assessee and reversed the view of the Commissioner (Appeals). 18. On the other hand, Mr. Jetly appearing for the Revenue would submit that the referring order has rightly noted the controversy In the referring order, this Court has found that the attempt is to claim something which the law does not permit to be claimed at all. If the law does not permit something, no provision t....
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.... of excise, in relation to which such refund is claimed, was collected from or paid by him and incidence of such duty had not been passed by him to any other person. The later provision enabling the claiming of refund is now worded differently. We have reproduced it and now it is only when the proviso is attracted that the amount of refund can be paid over to the applicant or else it has to be credited to the fund. Even earlier, the amount used to be credited to the fund, but the proviso says that instead of being credited to the fund, it can be paid to the applicant if such amount in this case is relatable to refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made. The crucial words are that "the refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made or any notification issued under this Act". If the excisable goods are not used as inputs in accordance with the rules made, to our mind, there is no question of any refund. Our view gets support and reinforcement from the language of the rules themselves. Mr. Patil relies upon Rule 5 of the Cenvat Credit Rules, 2004. That Rule reads as under :- ....
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....he Cenvat credit in respect of the input or input service so used shall be allowed to be utilised by the manufacturer or provider of output service towards payment of duty of excise on any final product cleared for home consumption or for export on payment of duty or service tax on output service. Whether for any reason, such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitation as may be specified by the Central Government by a notification. 27. The attempt made to rely upon the transitional provision, particularly Rule 11 carries the case no further. Rule 11 of the Cenvat Credit Rules, 2004 reads as under :- "Rule 11. Transitional provision. - (1) Any amount of credit earned by a manufacturer under the CENVAT Credit Rules, 2002, as they existed prior to the 10th day of September, 2004 or by a provider of output service under the Service Tax Credit Rules, 2002, as they existed prior to the 10th day of September, 2004, and remaining unutilized on that day shall be allowed as CENVAT credit to such manufacturer or provider of output service under these rules, and be allowed to be uti....
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....duty under a bond or letter of undertaking of a service provider, who provides an output service which is exported without payment of tax and by applying the format which is carved out with effect from 1st April, 2012 by the substituted Rule 5. 30. Prior to such substitution, we have not seen anything in Rule 5 permitting refund of unutilised credit. We are not dealing with a situation or case of a manufacturer or producer of final products seeks to claim Cenvat credit of the duty paid on inputs lying in stock or in process when the manufactured or produced goods cease to be exempted goods or any goods become excisable (see Rule 3(2) of the Cenvat Credit Rules, 2004). Thus, refund of Cenvat credit is permissible where any input is used for the final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate products cleared for export. In the scheme of the rules, therefore, what is sought by the assessee is not permissible. Thus, the attempt by the assessee to claim refund of unutilised Cenvat credit cannot be upheld. Merely because the inputs were lying unutilised or were capable of being utilised, but the manu....
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....a manufacturer. Thus, even if there is no manufacture in the light of the closure of the factory, the assessee being a manufacturer is construed as one coming out of the Modvat scheme but still eligible for cash refund. The factory is closed and the inputs were not used in the manufacture of a final product is, thus, overlooked. So long as the assessee is a manufacturer even if his factory is closed, the input credit was available, is thus the view. Hence, the refund was held to be permissible. 33. When the matter was carried to the Hon'ble Supreme Court by the Revenue, the Hon'ble Supreme Court noted the concession of the Learned Additional Solicitor General. That concession is that the views of the Tribunals to the aforesaid effect have not been appealed against by the Revenue/Union of India. Pertinently, there is no concession by the Additional Solicitor General of India on the point of law. Hence, going by this concession on fact, the Special Leave Petition of the Revenue was dismissed. This, by no stretch of imagination, is a confirmation or approval of the view taken by the South Zonal Bench of the Tribunal at Bengaluru or the High Court of Karnataka. 34. Pe....
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....lication to the facts and circumstances before us. 39. The referring order has already discussed in detail as to how the principle of merger cannot be invoked in this case. In the order passed in the case of Jain Vanguard (supra), the question of law was expressly kept open. Hence, the earlier view of the Tribunal does not merge with dismissal of the Special Leave Petition in the case of Slovak India (supra). Hence, this principle has also no application. 40. As a result of the above discussion, we answer the questions of law framed above as (a) and (b) in the negative. They have to be answered against the assessee and in favour of the Revenue. Questions (a) and (b) having been answered accordingly, needless to state that the order of the Hon'ble Supreme Court in the case of Slovak India (supra) cannot be read as a declaration of law under Article 141 of the Constitution of India. 40. Thus, we find that the Slovak India decision of the Karnataka High Court [affirmed by the Supreme Court] has been distinguished and overruled by the Three Judges Bench of the Bombay High Court. Therefore, the reliance placed on the Slovak India case by the appellants in t....
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.... cases of CESS such as Education Cess (E Cess), Secondary & Higher Education Cess (SHE Cess) and Krishi Kalyan Cess (KK Cess) has been taken away by a retrospective amendment. However, the petitioner claims that not only on the date of its issuance but even on the date this writ petition was presented, the amendment(s) referred to in the impugned notice had not come into force and, therefore, the impugned notice has been issued on an untenable legal premise; hence, it is without jurisdiction. 8. It would not be incorrect to infer that but for the introduction of Explanation 3 to Section 140 of the CGST Act by Section 28 of the Amending Act, the impugned show-cause notice may not have seen the light of the day. A pointed reference is made to Explanation 3 wherein it has been expressed that 'eligible duties and taxes' excludes any CESS which has not been included in Explanations 1 and 2 of Section 140 of the CGST Act; also a reference is made to Explanations 1 and 2 that the same do not include Education Cess, Higher Secondary Education Cess and Personal Account Amounts within the ambit of the 'eligible duties and taxes'. 13. Although it is true, as contended by Mr.....
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.... Act 2017 was notified or not in respect of the Show Cause Notice issued. The appellant had transitioned the Edu Cess and other cesses and was issued SCN demanding reversal of the same. They had approached the High Court being aggrieved by the SCN. The facts in the present case are different. In the present case, the appellants have transitioned the Cesses, have reversed and have claimed the same as refund, which is the issue before us. We have elaborately discussed about the relevancy of Forms like ER 1, TRAN1, Section 140(1), Proviso thereto, and Explantion 1, Explanation 2, the clauses (i) to (viii) specifying the eligible duties / taxes for transitioning and come to our considered decision. We also notice the on the very issue the Madras High Court had already rendered their decision on 16.10.2020 in the case of Sutherland, but was not cited by the Revenue before the Bombay High Court, which has rendered their Order on 29.10.2021. Nor the decisions of Cellular Operators [Delhi High Court - 15.02.2018] or Baswara Syntex [Rajasthan High Court- 24.09.2018], on the very issue were cited before the Bombay High Court. Further Para 15 of the Bombay High Court, makes it clear that the ....
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....es. 28. Cess being a specially collected or enforced imposition or 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 su....
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....ly permits such credit to be taken even after such input services are paid before the appointed date of 1-7-2017, but invoices in respect of them are received after the said appointed day of 1-7-2017 for which a time period of 30 days is prescribed and the said period can still be extended by another 30 days for reasons to be recorded by the Commissioner. Therefore, the Legislature has very carefully specified the duties and taxes in respect of stocks held for which requisite declaration in Form TRAN-1 is submitted as on 30th June, 2017 and also the service tax in respect of services which are input services received before 30th June, 2017 of which invoices may not have been received before that date and therefore, a relaxation of 30 days is provided for them. Therefore, the Court by any intendment or implication cannot include the aforesaid three types of Cesses, with which we are concerned, in the terms of "Eligible Duties and Taxes" or "Eligible Duties" with reference to Explanation 1 and Explanation 2 to be carried forward and transitioned under Section 140 of the Act. 35. The Legislature took further care by inserting Explanation 3 which is couched in negative terms a....
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.... becomes only academic 42. We found considerable force in the contention raised on behalf of the Revenue before us that credit of such Education 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 1-7-2017. 45. Much reliance was placed by the Learned Counsel for the Assessee on the judgment of the Hon'ble Supreme Court in the case of Eicher Motors v. Union of India [1999 (106) E.L.T. 3 (S.C.)], in which dealing with the case of earlier system of Modvat before Cenvat Rules came into force and Rule 57F(4A) of the Central Excise Rules, 1944 was questioned before the Hon'ble Supreme Court and the Supreme Court struck down Rule 57F(4A) of the Central Excise Rules as being beyond the Rule making powers conferred on the Central Government under Section 37 of the Central Excise Act, 1944, on the ground tha....
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.... the pedestal of a statutory right, even that right can be curtailed and regulated by conditions for availing such right. It is clear from the Scheme of Section 140 of the GST Act that the transition and carry forward of the input tax credit of the taxes and duties paid under the earlier Indirect Tax Regimes was subject to conditions and specifications given in Section 140 of the Act and unless specifically allowed. Such carry forward or set-off could not be claimed by any implied intention or so called vested right theory. In our opinion, the unutilised Education Cess and Secondary and Higher Education Cess in the hands of the Assessee had become dead CENVAT Credit claim in the year 2015 itself with these levies dropped by the Finance Act, 2015 and therefore, there is no question of it being claimed as a right to be carried forward and set-off after 1-7-2017 against Output GST Liability. 55. We may also deal with the judgment of Division Bench of Delhi High Court relied upon by the Revenue in the case of Cellular Operators Association of India v. Union of India [2018 (14) G.S.T.R. 338] decided on 15-7-2018 and also referred by the Learned Counsel for the Assessee in suppo....
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.... Additional Excise Duties (3) Excise Duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (4) Service Tax (5) Additional Customs Duty commonly known as Countervailing Duty (6) Special Additional Duty of Customs (7) Central Surcharges and Cess, so far as they relate to the supply of goods and services. (8) State Value Added Tax/Sales Tax (9) Entertainment Tax (other than the tax levied by the local bodies) (1) Central Excise Duty (2) Additional Excise Duties (3) Excise Duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (4) Service Tax (5) Additional Customs Duty commonly known as Countervailing Duty (6) Special Additional Duty of Customs (7) Central Surcharges and Cess, so far as they relate to the supply of goods and services. 59. The GST Law spared and did not include within its ambit and scope only six commodities which were left out and continued to be covered by the earlier existing laws of Excise Duty and VAT Law and for that purpose, Entry 54 of the State List and Entry 84 of the Union List were also suitably amended by 10....
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.... 45. We find that the above judgement of the Madras High Court to be the most comprehensive decision on the very issue of eligibility of refund of Education Cess, SHE Cess and KKC in terms of Section 142 (3). This detailed considered decision was rendered while deciding the Writ Appeal No. 53 of 2020, on 16-10-2020. We take the view that on Sutherland Madras High Court decision to be most apposite and applicable to the facts of the present case. Muthoot Finance Ltd Vs. UOI 2024 (10) TMI 1658 (Ker-High Court) The petitioner is a Public Limited Company incorporated under the provisions of the Companies Act, 1956. It is engaged in financing, providing personal and business loans upon the security of gold. For the period from April 2017 to June 2017, the petitioner had filed returns under the provisions of the Finance Act, 1994 disclosing payment of Service Tax of Rs.10,36,39,987/- Education Cess (EC) amounting to Rs.67,69,195/-, Secondary and Higher Education Cess (SHEC) amounting to Rs.35,18,566/- and Krishi Kalyan Cess (KKC) amounting to Rs.54,65,526/-. 5. Having heard the learned counsel appearing for the petitioner and the learned Standing Counsel appearing f....
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....ss in the Electronic Ledger after 2015, after the levy of Cess itself ceased and stopped, does not even permit it to be called an input CENVAT Credit and therefore, mere such accounting entry will not give any vested right to the Assessee to claim such transition and set off against such Output GST Liability." I am in respectful agreement with the view taken by the Division Bench of the Madras High Court in Sutherland Global Services Private Limited (supra). Therefore, the question of transitioning the EC, SHEC and KKC Credit does not arise for consideration. To be fair to the petitioner, the petitioner has no case that such transitioning is permissible. Coming to the claim of the petitioner for refund, it is to be noted that the EC and SHEC were abolished with effect from 01.03.2015 and 01.06.2015 respectively. With the abolition of such Cess and the provisions of the CENVAT Rules providing that credit of such Cess can be utilised only for payment of the same Cess, the question of permitting the petitioner to utilize the credit does not arise for consideration. It is clear from the judgment of the Supreme Court in Union of India and Others v. VKC Footsteps India Private L....
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....cisions of High Courts and held that the refund cannot be granted under Section 142(3) (5) Suvikram - SM - Relied on and followed Sutherland Div Bench decision of Madras High Court and held that refund cannot be granted (6) Cellular Operators - Delhi HC - Analysed the provisions prevailing provisions prior to 1.7.2017 distinguished Eicher Motor relying on Osram Surya (P) Ltd. v. Commissioner of Central Excise [2002 (142) E.L.T. 5 (S.C.)] case and came to a conclusion that there is no 'vested right' or 'indefeasible right' towards the blocked Cesses available to the assessee as on 1.3.2015 and 1.6.2015 and refused to entertain the request of the appellants to merge the cesses with the Excise Duty and Service Tax so as overcome the financial difficulties on account of blocked cesses. (7) Banswara- Rajasthan HC - Dealt the with provisions prior to 1.7.2017. The appellant filed refund claim under Section 11 B for the blocked Cesses. Dismissed the appeal by upholding the Tribunal's decision that there is no provision under CCR 2004 to claim such refund. (8) Sutherland - Division Bench - Madras High Court - took into consideration the provisions of CCR....
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....s by way of TRAN 1 and SCN was issued to recover the amount involved in such Cesses. The appellant did not put-forth any arguments about the applicability of Eicher, Slovak, Nu Vista and other cases. Their cryptic argument is captured at Para 3 of the Final Order, from wherein the relevant portion is reproduced below : The impugned order is also alleged to have been passed without considering the submissions of the appellants. Section 142(3) of CGST Act, 2017 has not been judiciously considered which is squarely applicable to the appellant's case Appellant prepare to subsume the Education Cess and Secondary & Higher Education Cess in Central Excise Duty. Thus the order under challenge has wrongly denied eligibility of appellant for the impugned refund. ❖ Therefore, the Bench went into the provisions of Section 140, 142 of the CGST Act 2017. One of the important points made the order is reproduced below : 5.6 Further, We observe that the definition of 'eligible duties and taxes' as per the explanation 3 under Section 140 of the CGST Act, 2017 was amended with retrospective effect from 01.07.2017 whereby it is specified that cesses are exclud....
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....been held that the refund would not be eligible under Section 142 (3) of the CGST Act 2017. 51. Now coming back to the present case, we find that the Appellants have not brought in any case law to the consideration of this Bench [LB] to the effect that prior to 1.7.2017, the Edu Cess and SHE Cess were eligible as refund as against the two discussed High Court judgements [Cellular - Delhi and Banswara - Rajasthan] cited by the Revenue. In respect of post GST regime, the Appellant and interveners have brought in decisions of DB and SM of Tribunals, which have overwhelmingly relied on Slovak, Eicher and Samtel, cases which are not applicable to the facts of the present case. We find that the ratio laid down in the detailed and considered decision of Madras High Court in the case of Sutherland, would be squarely applicable to the facts of the present case. 52. Therefore, we dismiss the appeal filed by the appellant KEI on the grounds discussed above. The petitions of the Intervenors are also answered accordingly, rejecting their prayer for refund to be granted. 53. Now we take up the second issue of whether or not the refund claim filed by the appellant KEI would be hit by tim....