9911796707
TMI Blog2020 (10) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... nder 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 removing the cascading effect by providing for Input Tax Credit (ITC) system. Section 140 of the CGST Act, 2017, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed 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. 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 Section 140 of the Act mentioned in the Explanations 1 and 2 and as a tool of interpretation, Explanation 3 would apply to the entire Section 140 of the Act and sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose parent enactments. 3. The fine distinction between Cess, Tax and Duty will also be discussed hereafter. But, by way of introductory remark, it can be stated here that while Cess is collected from the person on whom such liability is fixed to meet a particular kind of expenditure incurred by the Government and its collection and expenditure is dedicated to that particular object or purpose of imposition of Cess. While Tax is a General Revenue, which can be spent by the Government for general public purposes and Duty is imposed on manufacture in the form of Excise Duty or Customs Duty on Imports, under those specified laws, which also go to the General Revenue of the State. Fees is yet another impost which has the basis of quid pro quo at its back. 4. The controversy involved in the present case is about the set off, adjustment or utilisation of the Input Tax Credit of Cess paid at the time of manufacture or import by the Assessee, which provides Technical and Call Centre Services all over the country, namely as to whether such Cess in the form of Education Cess, etc. can be adjusted against the Output GST liability under the provisions of CGST Act, 2017 (Central Goods and Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ward in a return, furnished under the existing law by him, for the period ending with the day immediately preceding the appointed day in such manner as may be prescribed: Provided that the registered person shall not be allowed to take credit unless the said credit was admissible as CENVAT credit under the existing law and is also admissible as input tax credit under this Act. Explanation.--For the purposes of this sub-section, the expression "unavailed CENVAT credit" means the amount that remains after subtracting the amount of CENVAT credit already availed in respect of capital goods by the taxable person under the existing law from the aggregate amount of CENVAT credit to which the said person was entitled in respect of the said capital goods under the existing law. (3) A registered person, who was not liable to be registered under the existing law, or who was engaged in the manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was availing of the benefit of notification No. 26/2012- Service Tax, dated the 20th June, 2012 or a first stage dealer or a second stage dealer or a registered importer or a depot of a manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of which has been paid by the supplier under the existing law, subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day: Provided that the period of thirty days may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding thirty days: Provided further that said registered person shall furnish a statement, in such manner as may be prescribed, in respect of credit that has been taken under this sub-section. (6) A registered person, who was either paying tax at a fixed rate or paying a fixed amount in lieu of the tax payable under the existing law shall be entitled to take, in his electronic credit ledger, 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 subject to the following conditions, namely:-- (i) such inputs or goods are used or intended to be used for making taxable supplies under this Act; (ii) the said registered person is not paying tax under section 10; (iii) the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.-For the purposes of 1[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); (vi) the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985; and (vii) the National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001 (14 of 2001) in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day. 1. Substituted for "sub-sections (3), (4)" by the CGST (Amdt.) Act, 2018 (31 of 2018), dt. 30.8.2018, w.r.e.f. 1-7-2017. Explanation 2.-For the purposes of 3[sub-sections (1) and (5), the expression "eligible duties and taxes" means-- (i) the additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Every declaration under sub-rule (1) shall- (a) in the case of a claim under sub-section (2) of section140, specify separately the following particulars in respect of every item of capital goods as on the appointed day- (i) the amount of tax or duty availed or utilized by way of input tax credit under each of the existing laws till the appointed day; and (ii) the amount of tax or duty yet to be availed or utilized by way of input tax credit under each of the existing laws till the appointed day; (b) in the case of a claim under sub-section (3) or clause (b) of sub-section (4) or sub-section (6) or sub-section (8) of section 140, specify separately the details of stock held on the appointed day; (c) in the case of a claim under sub-section (5) of section 140, furnish the following details, namely:- (i) the name of the supplier, serial number and date of issue of the invoice by the supplier or any document on the basis of which credit of input tax was admissible under the existing law; (ii) the description and value of the goods or services; (iii) the quantity in case of goods and the unit or unit quantity code thereof; (iv) the amount of eligible taxes and duties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of supplies of such goods effected during the tax period; (iv) the amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the common portal; and (v) the stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person." 9. The Ministry of Finance, Department of Revenue (Central Board of Indirect Taxes and Customs), New Delhi, issued a Circular No.87/06/2019-GST on 02nd January 2019 addressed to all Chief Commissioners and other Authorities clarifying the said provisions of CGST Amendment Act, 2018. The said Circular is also found to be relevant and therefore, it is quoted in extenso below. "Circular No. 87/06/2019-GST Dated 2nd January, 2019 F. No. 267/80/2018-CX.8 Government of India Ministry of Finance Department of Revenue (Central Board of Indirect Taxes and Customs) New Delhi To The Principal Chief Commissioners/ Chief Commissioners/Principal Commissioners/ Commissioner of Central Tax (All) The Principal Director Generals/ Director Generals (All) Sub: Central Goods and Services Tax (Amendment) Act, 2018- Clarification re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used elsewhere in the Act. 3.3 The expression "eligible duties" under section 140(1) does not in any way refer to the condition regarding goods in stock as referred to in Explanation 1 to section 140 or to the condition regarding inputs and input services in transit, as referred to in Explanation 2 to section 140. 4. Further, it has been decided not to notify the clause (i) of sub-section (b) of section 28 and clause (i) of subsection (c) of section 28 of CGST (Amendment) Act, 2018 which link Explanation 1 and Explanation 2 of section 140 to section 140(1). This would ensure that the credit allowed to be transitioned under section 140(1) is not linked to credit of goods in stock, as provided under Explanation 1, and credit of goods and services in transit, as provided under Explanation 2. However, the duties and taxes for which transition is allowed shall be governed by para 3.2 above. 5. No transition of credit of cesses, including cess which is collected as additional duty of customs under subsection (1) of section 3 of the Customs Tariff Act, 1975, would be allowed in terms of Explanation 3 to section 140, inserted vide sub-section (d) of section 28 of CGST Amendment Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Department of Revenue), under the provisions of the Central Excise Act, 1944 (1 of 1944) or under any other law for the time being in force. (2) The Education Cess on excisable goods shall be in addition to any other duties of excise chargeable on such goods, under the Central Excise Act, 1944 (1 of 1944) or any other law for the time being in force. (3) The provisions of the Central Excise Act, 1944 (1 of 1944) and the rules 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 excisable goods as they apply in relation to the levy and collection of the duties of excise on such goods under the Central Excise Act, 1944 or the rules, as the case may be. 94. Education Cess on imported goods. - (1) The Education Cess levied under section 81, in the case of goods specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), being goods imported into India, shall be a duty of customs (in this section referred to as the Education Cess on imported goods), at the rate of two per cent calculated on the aggregate of duties of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HEDULE [See section 88(1)] Provision of the CENVAT Credit Rules, 2002 to be amended Amendment Date of effect of amendment (1) (2) (3) Explanation to clause (b) of subrule (6) of rule 3. In the CENVAT Credit Rules, 2002, in rule 3, in sub-rule (6), in clause (b), for the Explanation, the following Explanation shall be substituted, namely:- "Explanation. - For the removal of doubts, it is hereby declared that the credit of the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and paid on or after the 1st day of April, 2000, may be utilised towards payment of duty of excise leviable under the First Schedule or the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);" 1st March, 2003 Introduction of Secondary and Higher Education Cess 11. Next is the Secondary and Higher Education Cess introduced by the Finance Act, 2007, from Section 136 onwards. The said Cess was levied as the surcharge to fulfil the commitment of the Government to provide Finance and Secondary and Higher Education. This Cess was also liable to be collected in addition to any other duties of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit Rules 2004 15. Rule 3 of the CENVAT Credit Rules, 2004, provides that a manufacturer or a purchaser of final products or a provider of output service shall be allowed to take credit (hereinafter referred to as CENVAT Credit) of the specified duties in that Rule 3, which included Education Cess and Secondary and Higher Education Cess in question. Sub-rule (7) of Rule 3 of CENVAT Credit Rules, 2004, specifically provided that CENVAT Credit in respect of Education Cess and Secondary and Higher Education Cess shall be utilised only towards the payment of Education Cess leviable on the taxable services only and not against the normal excise duty. Those CENVAT Rules, 2004 clearly restricted the utilisation of Education Cess and Higher and Secondary Education Cess on the output tax on goods and services and not against the normal excise duty or service tax liability. It was not disputed before us that cross utilisation of CENVAT Credit in the form of Education Cess and Secondary and Higher Education Cess against normal service tax and excise duty liability was not allowed. 16. The controversy, however, arose because the Assessee claimed in the present case that the unutilised par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tem was not available, as Output Cess Liability ceased, therefore, the untilised portion of such CENVAT credit in the form of Education Cess and Secondary and Higher Education Cess became a dead claim after such levies were dropped in the year 2015 and unlike unutilised portion of CENVAT credit in the form of specified additional excise duty, customs duty, National Calamity Contingent Duty on inputs which were transitioned as per Section 140 of the CGST Act for the period from 01.07.2017 also, such unutilised Cess could not stand at parity with unutilised Input credit of specified excise duty and therefore, the claim of the Assessee in this regard was misconceived and learned Single Judge has erred in allowing the same. 19. The learned counsel for the appellant/Revenue relied upon several case laws to support her contention as was done before the learned Single Judge also, which will be discussed by us hereafter. 20. The written submissions filed by the appellant/Revenue was also taken on record and the same is re-produced below, which have been considered by us. I. HISTORICAL BACKGROUND OF INTRODUCTION AND ABOLITION OF CESSES:-(EC,SHEC and KKC) a. Education Cess (hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Cess the intention of the statute was to allow the credit utilisation of CENVATCredit pertaining to these cesses only as against the respective cesses levied on excisable goods or output taxable services. This position continued till 2015. h. Thus cross utilisation of the Education Cess and Secondary and Higher Education Cess as against the output element of excise duty and service tax was never allowed. i. Education Cess and Secondary Higher Education Cess levied on excise duty and taxable services were abolished from the year 2015 by omission of Section 95 of the Finance Act 2004 and section 140 of the Finance Act 2007 vide Section 153 and 159 respectively of the Finance Act 2015. j. Consequently Notification 14 of 2015 - Central Excise and Notification 15 of 2015 - Central Excise and Notification 14 of 2015 - ST and Notification 15 of 2015 - ST exempted all the goods and services from the levy of Education Cess and Secondary Higher Education Cess 01.03.2015 and 01.06.2015 respectively. k. Thus after these two cut of dates, the levy of education cess and the levy of secondary higher education cess was completely wiped away from the statute book. In other words, the levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 12 of 2015 and 22 of 2015 were challenged before the Hon'ble Delhi High Court in the case of CellularOperators Association of India v UOI[Reported in 2018 (14) GSTL 522, (2018) 51 GSTR 338 (Del),MANU/DE/0710/2018]. o. Thus the Hon'ble Delhi High Court upheld the Notifications and held that the CENVATCredit of Education and Secondary Higher Education Cess which has been availed till the cut of date had lapsed to the Government and could not be cross utilised and could not be allowed to be cross utilised as against excise duty and service tax. p. The appellant submits that in the light of the statutory provisions and the legal position enumerated above and in the light of the decision of the Hon'ble Delhi Court, the appellant herein submits the synopsis of the oral arguments made before this Hon'ble Court on 30.09.2020 and 01.10.2020. II. SYNOPSIS OF LEGAL PROPOSTIONS: LEGAL PROPOSITION I :- Dead Claim a. It is submitted that the CENVAT Credit of Education Cess and Secondary and Higher Education Cess which had been availed prior to the cut of date namely 01.03.105 and 01.06.2015 had become dead claim and cannot be revived after a time gap of two years. The levy having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the general public is also there in the present case. f. The contention of the respondent-assessee by placing reliance on the decision in Hingir Rampur Coal Company Ltd. v. State of Orissa MANU/SC/0037/1960 : 1961 (2) SCR 537 that the Education Cess, Secondary and Higher Education Cess were credited into the Consolidated Fund of India(herein after referred as CFI) and therefore it is collected only a tax is wholly untenable for the following reasons:- i. Although initially the collections of Education Cess, Secondary and Higher Education Cess were credited into the Consolidated Fund of India,a specific account called Prarambhik Shiksha Kosh (PSK) was created in the year 2005-06 after obtaining Parliamentary authorization and these funds collected with respect to the education cess were transferred to Prarambhik Shiksha Kosh (PSK).Thus even though initially the funds pertaining to Education Cess were credited into the Consolidated Fund of India, it has been later transferred to the Prarambhik Shiksha Kosh (PSK) specifically created for the purpose of expending the Education Cess funds. This fact has been admitted by the respondent-assessee [page 78 of additional paper book f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account are made by the Ministry of Finance after approval by the Parliament. · Para 2.11 has also given the year wise chart on allocation and utilisation of education cess collected. It is further submitted that this point could not be brought to the notice of this Hon'ble Court during the oral arguments as the respondent-assessee herein filed the additional type set 2 containing the CAG report on the final day of the arguments. Thus the appellants herein submits and crave leave before this Hon'ble Court to make this submission on Madhyamik &Uchhatar Shiksha Kosh (MUSK) and the Standing Committee report as a response to the additional type set 2 and response to submissions of the respondent herein regarding the Consolidated Fund of India. LEGAL PROPOSITION III :-Cesses cannot take colour of basic levy a. It is submitted that the term duty does not include additional duties such as Education cess, Secondary and Higher Education Cess NCCD etc. thus unless there is specific notification or provision which specifically provides for any benefit with regard to additional duty, the benefit that is applicable to basic duty or tax cannot be extended to the additional duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. UOI [ 1999 (106) ELT 3 (SC). The contention of the respondent-assessee herein is that the CENVATCredit pertaining to Education Cess, Secondary and Higher Education Cess had already been availed as on 01.03.2015 and 01.06.2015 respectively but could not be utilised as cross utilisation with respect to excise duty and service tax was not permitted. Thus, their contention is that even though the CENVATCredit of Education Cess, Secondary and Higher Education Cess availed and available in the books of accounts and were lying unutilised due to the barring provisions, they could be transitioned into the GST regime as it was an indefeasible right. b. It is submitted that the there is difference between the availment of credit and utilisation of credit. The appellant also admits the legal position propounded by the respondent that even though there is statutory time limit fixed for availment of credit there is no time limit for utilisation of credit. However, the utilisation of the availed credit will remain indefeasible only when the facility for working it out or the levy with regard to the output element remains intact. In Eicher Motors Ltd. v. UOI [ 1999 (106) ELT 3 (SC) a provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t subsection (8) the phrase used is either "CENVAT Credit of the eligible duties" or "CENVAT Credit of eligible duties and taxes".The term "of eligible duties" or "of eligible duties and taxes" is not there in subsection (8) of section 140 of the CGST Act, 2017. Thus, the contention of the respondent is that they fall under section 140(8) as they were having centralised registration in the earlier regime and that as the subsection does not contained the phrase "of eligible duties" or "of eligible duties and taxes". The CENVAT credit pertaining to Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess can be transitioned into the GST regime. This contention is refuted by the appellant . c. Regarding the contention that section 140(8) does not contain the phrase "of eligible duties" or "of eligible duties and taxes". The appellants submits that a harmonious construction of section 140 of the CGST Act, 2017 as a whole indicates that the draftsman intended the transition of only the eligible duties and taxes of the earlier regime that has been subsumed prior to the inception of GST. d. Thus as on 01.07.2017 Education Cess, Secondary and Higher Education Cess a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only the subsumed duty and taxes which were in existence as on 01.07.2017 and it was never the intention to transition the cesses which have been abolished much prior to 01.07.2017. 2. The draftsmen by inadvertencehad overlooked the phrase "of eligible duties" and the omission is not intentional. 3. It can be said with certainty that the additional words which would have been inserted by the draftsman had the attention been drawn much earlier would be "of eligible duties". LEGAL PROPOSITION VI :- Implied Lapse a. Thus the last legal proposition submitted by the appellant herein that Section 140(1) and Section 140(8) signifies an implied lapse of the availed CENVAT Credit of Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess which were availed and lying unutilised in earlier regime and thus cannot be transitioned into the GST Regime. Thus, in the circumstances stated above and those urged in the Grounds of Appeal and oral arguments, it is prayed that this Hon'ble Court may be pleased to ALLOW the Writ Appeal 53/2020 , pass such other order or orders as this Hon'ble Court may deem fit and proper in the circumstances of the case and thus render justic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such Cess, which was not so far utilised and such credit was carried forward in its Electronic Ledger which was submitted in the form of TRAN-1 Form as required in the new GST provisions was never objected to by the Revenue authorities until the impugned communication was issued to the Assessee on 14.02.2018 which led to the filing of the writ petition. Therefore, the learned Single Judge was justified in allowing the same to the Assessee. 24. The learned counsel for the Assessee also submitted that Explanation 1 and 2 of Section 140 of the CGST Act clearly stipulated and while Explanation 1 talks of the expressions "Eligible Duties" in Sub-sections (1), (3), (4) and (6) of Section 140, Explanation 2 talks of expressions "Eligible Duties and Tax" in Sub-sections (1) and (5), under the specified enactments mentioned in Explanations 1 and 2 and since the Education Cess and Secondary and Higher Education Cess were not mentioned in those Explanations 1 and 2, therefore, the Cess did not fall within the ambit and scope of "Eligible Duties" or "Eligible Duties and Taxes" and the claim of the Assessee with respect to the set off could not be denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision consists of several sub-sections, each of which is in relation to a specific independent scenario of transition. The following table would illustrate the purpose of each sub-Section of Section 140. Sub-Section Purpose 140(1) Transition of already availed cenvat credit reflected in the last Returns filed under the erstwhile laws. It is based on credit availed and remaining unutilized in the Returns. 140(2) It covers transition of unavailed credit on capital goods under the erstwhile laws. CCR restricts credit on capital goods for the first year to be 50%. The remaining portion of credit unavailed, which is not covered under the Returns filed under erstwhile laws, is granted. It is not covered under Section 140(1). 140(3) It covers registered person who was enjoying exemption from output liability under erstwhile laws but is subject to GST liability. It grants credit in respect of inputs lying in stock as on 01.07.2017. It is not covered under Section 140(1). 140(4) It covers registered person who was engaged in both taxable and exempted activities under erstwhile laws but is now wholly subject to GST liability. It grants credit as reflected in the last Returns f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard is placed on CCE v. Universal Ferro and Allied Chemicals Ltd. 2020 5 SCC 332 [paragraph 46 to 48] A.8 Since the assessee was having a centralized registration, the assessee's case would be squarely covered by Section 140(8) being a specific provision as compared to Section 140(1). A.9 Section 140(8) of the CGST Act states that a registered person having centralized registration under the existing Law (Finance Act, 1994) and has obtained a registration under the CGST Act, shall be allowed to take (avail), in his electronic credit ledger, credit of the amount of CENVAT Credit carried forward in the returns, furnished under the existing law (ST-3 Returns) in respect of the period ending with the day immediately preceding the appointed day (April- June 2017) in such manner as may be prescribed. First Proviso states that if the last period's Returns under existing law is filed within three months of the appointed day, the credit as reflected in the original/revised Return shall be allowed. The assessee filed the ST-3 Returns for April-June 2017 using this extended time period provided. Second Proviso states that the credit shall not be allowed unless it is eligible as an Input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o venturing into a kind of judicial legislation. Reliance in this regard is placed on Union of India v. Ind-Swift Laboratories Ltd. 2011 (265) ELT 3 (S.C.) and CIT v.Calcutta Knitwears (2014) 6 SCC 444 (paragraphs 29 to 31). Such an exercise would amount to a situation of casus omissus which is impermissible for the Courts to do. Therefore, these words cannot be supplied into the provisions. Reliance in this regard is placed on UOI Vs. Deoki Nandan Aggarwal 1992 AIR 96 SC [paragraph 14], B.R. Kapur v. State of T.N. &Anr. (2001) 7 SCC 231[paragraph 39] and UOI v. Dharmendra Textile Processors 2008 13 SCC 369 [paragraph 16]. A.15 The Appellant Department has placed reliance on Dilip S Dhanukar v. Kotak Mahindra Ltd. & Ors. [MANU/SC/8289/2007] for adopting purposive interpretation. The said decision was rendered in the context of personal liberties of an accused while interpreting criminal law provisions and Article 21. The same principle cannot be applied for interpreting taxing statutes wherein, as stated above, it has been held time and again that literal interpretation ought to be adopted. Further reliance is also placed on CST v. Modi Sugar Mills Ltd. AIR 1961 SC 1047 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terated that it is not a mere inadvertent error but a deliberate decision. Hence, the purpose of not notifying should be looked into. Therefore, the said expression 'eligible duties' in Section 140(1) ought not to be read as defined under Explanation 1 to Section 140, which is for a wholly different purpose and situation. B.5 Since Explanation 1 of Section 140 cannot be attracted and Explanation 2 is not applicable, eligible duties in 140(1) is to be understood in its normative sense. In the context of CENVAT credit, it is submitted that it ought to be understood as duties which are eligible for availmentas CENVAT credit. Impugned Cesses are duties of excise though not Basic Excise Duty. B.6 It is submitted that the impugned Cesses are duties of excise/ taxes. These Cesses are imposed on the event of manufacture/ provision of service and therefore, it would partake the character of duties of excise or tax on service, as the case may be. B.7 Edu Cess and SHE Cess 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: "Dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on issued under Rule 8(1) of Central Excise Rules can be borrowed for claiming exemption from special duties of excise levied under Finance Act, 1979. The Court held that the power to grant exemption under Rule 8(1) is only in respect of basic excise duty under the Excise Act. Therefore, any Notification issued under the said Rule cannot be read as extending the benefit to levies created under a different Enactment like Finance Acts. In other words, this decision is not an authority on the point whether special excise duties are duties of excise or not. Similarly, in the Unicorn Industries case, the issue was whether an exemption Notification issued under Section 5A of the Excise Act can be automatically applied for claiming exemption from Cesses levied under various Finance Acts. It is submitted that none of these are authorities to decide whether cesses are duties of excise. The only conclusion 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Works v. UOI 1970 SCC Online Bom 90 30 to 42 C.3 Further, Hon'ble Karnataka High Court in the case of CCE v. Shree Renuka Sugars Ltd. 2014 (302) ELT 33 (Kar), while holding that Sugar Cess is in the nature of a tax/duty, held that if the cess levied and collected is credited to the Consolidated Fund of India and it has to be appropriated by the Parliament by law and then only the said amount could be credited to the Fund; it ceases to be a fee and partakes the character of a duty or a tax. C.4 A conjoint reading of the all the above judgements would clearly indicate that when an impost (by whatever name called) goes to the Consolidated Fund of India and not to any specific fund earmarked for the purpose, then such impost would acquire the character of taxes and not fee. Impugned Cesses collected form part of Consolidated Fund of 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iksha Kosh (albeit created contrary to procedure) Fund was created in August 2017. It further states that this Fund has not been made operationalized so far. C.11 The above CAG Reports evidence that the Impugned Cesses are retained in the Consolidated Fund of India or are merely accounted under a distinct treasury account name in the Public Account.Thus, it is submitted the Cesses having been deposited into Consolidated Fund of India and there being no quid pro quo between collection and expenditure of these Cesses, they are in the nature of tax and not fee. C.12 It is submitted that it is for these reasons, even Hon'ble Delhi High Court in the Cellular Operators Association of India v. UOI (2018) 14 GSTL 522 (Del.) at paragraph 12, held that Edu Cess and SHE Cess are in the nature 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Impugned Cesses. Section 37(xxviii) of the Excise Act specifically confers powers on the Central Government to frame Rules for lapsing credits lying unutilized. Thus, lapsing of credits can happen only through framing of Rules for the purpose. It can never be through a mere implication. D.5 It is submitted that had the intention of the Central Government been to lapse such CENVAT credit, it ought to have enacted lapsing provisions on the lines of Rule 11(2), 11(3), 11(4) of CCR etc. Even under the prior excise credit regime, whenever it was the intention of the Central Government to take away the existing un-utilized credits, the same was done by a specific lapsing provision 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 Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Board has clearly admitted the difference between taking of CENVAT credit and its subsequent utilization. Reliance placed on Osram Surya and Uttam Steel line of decisions is misplaced. E.4 Reliance has been placed on Hon'ble Supreme Court decisions in Osram Surya Pvt. Ltd. v. UOI AIR 2002 SC 2194 and UOI v. Uttam Steel Ltd. (2015) 319 ELT 598 (SC) by the Appellant Department to submit that dead claims cannot be revived.In the first case, the assessee had not availed the credit but was yet to avail the credit. The Court held that there is no inherent right to avail credit. In the present case, the credits have been 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being not eligible for carry forward, transition and set off against the Output GST Liability under Section 140 of the CGST Act, are as under. 27. Firstly, we may state that obviously, there is no intendment or equity about taxation and both the charging provisions as well as the exemption provisions in taxing statutes have to be strictly construed and the Golden Rule of Interpretation of plain language being given plain meaning is the cardinal principle applicable to taxing statutes. 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 Educ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of Section 140, but are used only in Sub-section (5) of Section 140, and again the eight specified "Eligible Duties and Taxes", first seven are repeat of Explanation 1 "Duties" and the eighth one is Service Tax, eligible to be set off and carry forward under CGST Act, 2017. 32. A closer examination of Explanation 1 and Explanation 2 would indicate that while the first 7 items in Explanation 1 are just repeated in Explanation 2 and we cannot impute any redundancy for such repetition to the Legislature, only Clause (viii) in Explanation 2 included 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 additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Explanation 3, in our opinion, specifying that any kind of Cess will be excluded for the purpose of Section 140, makes the intention of the Legislature very clear and Sub-section (8) of Section 140, which was emphasized by the learned counsel for the Assessee before us, is not excluded from the effect and operation of Explanation 3, because the exclusion is of any Cess which has not been specified in Explanations 1 and 2, Education Cess and Secondary and Higher Education Cess and Krishi Kalyan Cess are not included in Explanations 1 and 2 at all. Therefore, the exclusion of Education Cess and Secondary 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ronic Ledger and filing of Form TRAN-1 will not confer any such right on the Assessee and as Lord Russell pointed out in an Income Tax matter in the case of BSC Footwear Ltd. v. Ridgway (Inpsector of Taxes) [(1972) 83 ITR 269] that the Income Tax Law does not march step by step in the divergent footprints of the accountancy provisions. Rightly so, mere accounting practice and accounting entries do not confer a right on the Assessee in the taxation laws much less a vested right which cannot be undone or curtailed by statutory provisions. Therefore, the claim of the Assessee based on the carry forward of unutilised Education Cess and Secondary and Higher Education 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 Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nations 1 and 2. On the contrary, Explanation 3 clearly excluded Cess to be so eligible for carry forward and set off. Therefore, there is no iota of doubt that Cess of any kind except National Calamity Contingent Duty (NCCD), which was so specified in Explanations 1 and 2 specifically could be allowed to be carried forward and adjusted against Output GST Liability. It may be noted here that this NCCD is allowed to be transitioned not as CENVAT credit, but because it is specifically included as "Eligible Duties" in Explanations 1 and 2 of Section 140 of the Act. 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 01.07.2017. 43. What we have stated above is supported by the recent judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have to be to Rule 8(1) read with Section 32(4) or other similar provision. (Para 44) Union of India v. Modi Rubber Ltd. (1986) 4 SCC 66 : 1986 SCC (Tax) 781, followed. When the exemption is granted under the particular provision, it would not cover any other kind of duty of excise imposed under separate Acts. (Para 45) Union of India v. Modi Rubber Ltd. (1986) 4 SCC 66 : 1986 SCC (Tax) 781, followed. The Notification dated 9-9-2003 issued in the present case makes it clear that exemption was granted under Section 5-A of the 1944 Act, concerning additional duties under the 1957 Act and additional duties of excise under the 1978 Act. It was 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 du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereto then the tax on these goods gets adjusted which are finished subsequently. Thus a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and therefore, we may have no hesitation to hold that the rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, assuming that such Education Cess or Secondary and Higher Education Cess was re-imposed by the Central Government in the Finance Act, 2016 or 2017 and there was some Output Education Cess or Secondary and Higher Education Cess liability of the Assessee, one could understand the claim of the Assessee of unutilised Input Cenvat in the form of Education Cess and Secondary and Higher Education Cess to be allowed to be set off against such Output Education Cess and Secondary and Higher Education Cess Liability re-imposed by subsequent enactment. But, such is not the case available before us. Therefore, we have no doubt that 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. In regard to fees there is, and must always be, corelation between the fee collected and the service intended to be rendered. Cases may arise where under the guise of levying a fee Legislature may attempt to impose a tax; and in the case of such a colourable exercise of legislative power courts would have to scrutinise the scheme of the levy very carefully and determine whether in fact there is a co-relation between the service and the levy, or whether the levy is either not co-related with service or is levied to such an excessive extent as to be a presence of a fee and not a fee in reality. In other words, whether or not a particular 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public revenue and are not appropriated in the manner laid down for appropriation of expenses for other public purposes. They go to constitute a fund which is contemplated by Section 50 of the Act, and this fund to which the Provincial Government contributes both by way of loan and grant is specifically set apart for the rendering of services involved in carrying out the provisions of the Act. 12. The same view was taken by this Court in regard to s. 58 of the Bombay Public Trust Act, 1950 (Act XXIX of 1950) which imposed a similar contribution for a similar purpose in Ratilal Panachand Gandhi v. The State of Bombay. It would 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise and customs, imposed and collected on motor spirit commonly known as petrol and high speed diesel oil for the purposes of this Act, [Section 2(b), Central Road Fund Act, 2000 (India)]. 21.2.Is also a tax, but is a special kind of tax. Generally tax raises revenue which can be used generally for any purpose by the State, Vijayalashmi Rice Mill v. CTO, (2006) 6 SCC 763. 21.3.The term cess is commonly employed to connote a tax with a purpose or a tax allocated to a particular thing suggested by the name of the cess, such as health cess, education cess, road cess etc. This is a well settled position of 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 rendere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rur Mutt, AIR 1954 SC 282: 1954 SCR 1005: 20 Cut LT 250. 22.2. A tax is undoubtedly in the nature of a compulsory exaction of money by a public authority for public purposes, the payment of which is enforced by law. But the other and equally important characteristic of a tax is, that the imposition is made for public purpose to meet the general expenses of the State without reference to any special advantage to be conferred upon the payers of the tax, Ratilal Panachand Gandhi v. State of Bombay, AIR 1954 SC 388: 1954 SCR 1055: 56 Bom LR 1184. 22.3.An impost; a tribute imposed on the subject; an excise; 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impost - "Taxation" includes the imposition of any tax or impost, whether general or local or special and "tax" shall be construed accordingly. Though it is not an exhaustive definition and only shows what is included in the word one is struck immediately by its width of language. Though it speaks of any tax or impost, it goes a step further and adds "whether general or local or special", indicating thereby that no special or local considerations are relevant and even a general non discriminatory levy must be regarded as taxation. The definition of taxation speaks of impost. 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. Ordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x. A fee being a levy in consideration of rendering service of a particular type, correlation between the expenditure incurred by the Government and the levy must undoubtedly exist, but a levy will not be regarded as a tax merely because of the absence of uniformity in its incidence or because of compulsion in the collection thereof, nor because some of the contributories do not obtain the same degree of service as others may, Sudhindra Thirtha Swamiar v. Commr., Hindu Religious and Charitable Endowments, AIR 1963 SC 966, 975: 1963 Supp (2) SCR 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 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Care Ltd., (2003) 2 SCC 169. 28.5.The act of raising money or men. [Wharton?s Law Lexicon.] 28.6.The term "levy" it is held, is an expression of wide import. It includes both imposition of a tax as well as its quantification and assessment, Ujagar Prints (2) v. Union of India, (1989) 3 SCC 488. 29.Levy and collect - In taxing statute the words "levy" and "collect" are not synonymous terms, while "levy" would mean the assessment or charging or imposing tax, "collect" would mean the physical realisation 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 imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served by the grantor of a patent, lease of a mine or similar right and payable proportionately to the use made of the right by the grantee", Distt. Council, Jowai Autonomous Distt. v. Dwet Singh Rymbai, (1986) 4 SCC 38. 33.3.Royalty in general connotes the State's share in the goods upon which the rights of its exploitation are conferred upon any person or the group of persons. If the royalty cannot be claimed by any individual, much less the controversial items being its attribute, even if assumed, can be claimed by a citizen, State of H.P. v. Raja Mahendra Pal, (1999) 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. [Wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er decision in this regard in the case of S.S. Gadgil v. Lal and Co. [AIR 1965 SC 171] in the following manner. "10. We have heard learned counsel for the parties and Shri Bagaria, the learned Amicus Curiae at some length. There is no doubt whatsoever that a period of limitation being procedural or adjectival law would ordinarily be retrospective in nature. This, however, is with one proviso super added which is that the claim made under the amended provision should not itself have been a dead claim in the sense that it was time barred before an Amending Act with a larger 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .....'. Further, such original tax invoice should evidence the amount of input tax. So much so, even if the original tax invoice is lost, the obligation cast on the registered dealer is to obtain duplicate or carbon copy of such tax invoice from the selling dealer and only then input tax is allowed. From the aforesaid scheme of Section 19, following significant aspects emerge: (a) ITC is a form of concession provided by the Legislature. It is not admissible to all kinds of sales and certain specified sales are specifically excluded. (b) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 01.07.2017 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 GSTR 338] decided on 15.07.2018 and also referred by the learned counsel for the Assessee in support of the submission that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out or until the goods existed. As noticed above, tax/duty had not been withdrawn. Lastly and more importantly, Section 37 of the Central Excise Tariff Act, 1985 did not enable the authorities to make the Rule impugned therein. The legal ratio in Eicher Motors Limited and Another (supra) was followed in Samtel India Limited (supra) wherein amended Rule 57-F(17) of the Central Excise Rules, 1944 was challenged. The Rules had postulated lapsing of credit in case of manufactured goods falling under sub-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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oming into force of that Rule, by that the right to credit itself was taken away, whereas in the instant case by the introduction of the second proviso to Rule 57-G, the credit in the account of a manufacturer was not taken away but only the manner and the time within which the said credit was to be taken or utilized alone was stipulated. It is to be noted at this juncture that the substantive right has not been taken away by the introduction of the proviso to the Rule in question 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karkaria Ltd. & Ors. [1997 (7) SCC 448]. 8. It is vehemently argued on behalf of the appellants that in effect by introduction of this Rule, a manufacturer in whose account certain credit existed, would be denied of the right to take such credit consequently, as in the case of Eicher (supra), a manufacturer's vested right is taken away, therefore, the Rule in question should be interpreted in such a manner that it did not apply to cases where credit in question had 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the new GST Regime with effect from 01.07.2017. 60. Obviously, the transition of unutilised Input Tax Credit could be allowed only in respect of taxes and duties which were subsumed in the new GST Law. Admittedly, the three types of Cess involved before us, namely Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess were not subsumed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
