2018 (10) TMI 1691 - HC - Central Excise

Refund of education cess and higher education cess - Area based exemption as per North East Industrial and Investment Promotion Policy, 2007 - whether the education cess and higher education cess were a part of the excise duty? - HELD THAT - The issue decided in the case of M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI 2017 (11) TMI 655 - SUPREME COURT where it was held that the education cess and the higher education cess levied @ 2% of the excise duty would partake the character of excise duty itself. Accordingly, it was held that the appellants therein were entitled to a refund of the education cess and the higher education cess, which was paid along with the excise duty, once the excise duty itself was exempted from levy. This Court directs the respondents in the Department of Excise/Goods and Services Tax of the Government of India, more particularly the respondent Nos. 4 to 6 to make an appropriate calculation and thereupon refund the education cess and the higher education cess paid by the petitioner from 2004-2005 to 2014-2015 - petition disposed off.

Summary

Issues:
Claim for refund of education cess and higher education cess under the North East Industrial and Investment Promotion Policy, 2007.

Analysis:
The petitioner, an industrial unit in Assam, sought exemptions from excise duty under the NEIIPP, 2007. The policy allowed exemptions for units commencing production after 01.04.2007 or expanding substantially post that date. The petitioner paid education cess and higher education cess as per the Finance Act of 2004, in addition to excise duty. The petitioner claimed a refund of excise duty under the 2007 policy, and after due process, received the refund. However, a question arose whether the education cess and higher education cess were also refundable under the policy, considering if they were part of excise duty.

The issue was resolved by the Supreme Court in Civil Appeal Nos. 2781-2790 of 2010, where it was held that the education cess and higher education cess, being levied at 2% of excise duty, were to be treated as excise duty itself. Consequently, the appellants were entitled to a refund of these cess amounts when the excise duty was exempted. Relying on this judgment, the petitioner filed a writ petition seeking a refund of education cess and higher education cess for the period 2004-2005 to 2014-2015.

The Ministry of Finance, Government of India, and other relevant authorities, in line with the Supreme Court's decision, agreed to refund the education cess and higher education cess paid by the petitioner. The High Court referenced a similar case from the High Court of Meghalaya where a refund was directed in a comparable scenario. Consequently, the High Court directed the concerned authorities to calculate and refund the education cess and higher education cess paid by the petitioner within five months from the date of the court order.

Therefore, the writ petition was disposed of in favor of the petitioner, with a clear directive for the refund process to be completed promptly as per the court's instructions.