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TMI Blog2024 (1) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Finance Act, 2010 itself provides for Collection and Rates of Tax . Rules 4 Rule 6 of Cess Rules specifies the procedure that the Cess is payable by 5th of the second month. The Rule does not specify that the Cess is to be paid at the rate applicable at the time of removal. Therefore, prima-facie it appears that respondent had the power to levy and collect Clean Energy Cess on the coal already produced and lying in stock as on 30.06.2017 - respondent had the power to levy and collect Clean Energy Cess on the coal lying in stock as on 30.06.2017 at the specified rates which were produced when the said cess was in force. It is reiterated that liability to pay cess only accrues at the time of production and its payment is scheduled when the coal is removed in view of Rule 4 and 6 of Cess Rules since, as per section 83(3) of Finance Act, 2010 levy is on production of coal. Rule 4 and 6 deals only with time and manner of payment/discharge of cess and not the rate. In this regard, reference may be placed on the dictionary meanings of the words 'accrued' and 'acquired'. The Revenue is right is demanding the tax on production which was lying on stock as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Petitioner : Mr. Laxmi Kumaran, Advocate M/s. A.K.Das, Shilpi Shalni, Advocates For the Respondent :M/s. Anil Kumar, ASGI Ashish Kumar Shekhar, Advocate PER DEEPAK ROSHAN, J Heard learned counsel for the parties. 2. The petitioner has prayed for the following reliefs: (i) For issuance of appropriate writ(s)/order(s)/, direction(s) quashing the order dated 29/09/2020 (Annexure-3) passed by Principal Commissioner, Goods Services Tax-CX whereby and whereunder the contentions of the petitioner were rejected and a demand against Clean Environment Cess of Rs. 470,83,42,400 was confirmed by Respondent No. 3 and to be recovered from the petitioner along with an equivalent penalty imposed under Section 11AC of the Central Excise Act, 1944 read with Clean Energy Cess Rules, 2010 on the alleged closing stock of coal on June 30, 2017 and all the purported proceedings there under and/or relating thereto and/or in pursuance thereof and to act according to law; And; (ii) For issuance of appropriate writ(s)/ order(s), direction(s) for any Injunction restraining the respondents and each of their servants and/or agents and/or assignees to forebear fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Rule 6. It has been further submitted that Rule 5 of the Central Excise Rules, 2012 provides that the rate of duty applicable to any excisable goods shall be the rate in force on the date such goods are removed from the factory. In terms of the above Rules, in the event of increase in the rate of Clean Energy Cess, the petitioner was paying the Cess at the increased rate for the coal lying in stock as on the date of rate change. This is explained in the table below: S.No. Date Event Rate at which Cess was paid 1. 01.07.2010 Clean Energy Cess introduced. As per Tenth Schedule of Finance Act, 2010, Cess was payable at Rs. 100 per tonne. However, Notification No. 3/2010-Clean Energy Cess dated 22.06.2010 exempted duty in excess of Rs. 50 per tonne. Therefore, Cess was payable at Rs. 50 per tonne Cess paid at Rs. 50 for goods lying is stock on 30.06.2010 and removed subsequently 2. 11.07.2014 Notification No. 3/2010 was rescinded vide Notification No. 20/2014-CE dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g act specifically saves the rules. In support of this contention learned counsel referred to the judgment reported in Air India v. Union of India Ors, (1994) 4 SCC 734, Para 6-8; Watson v. Winch, [1916] 1 K.B. 688]. It has also been submitted that Section 18(2) of the Taxation Laws Amendment Act, 2017 does not specifically save the Cess Rules and Notification No. 2/2010-Clean Energy Cess, dated 22.06.2010 (i.e., the Notification borrowing the provisions of Central Excise Act, 1944 for recovery, interest etc.). Therefore, the Cess Rules and the said Notification ceased to have any validity w.e.f. 01.07.2017. Learned counsel further contended that the Cess Rules and Notification No. 2/2010 would not be saved by virtue of Section 6 of General Clauses Act, 1897 as Section 6 is only applicable to repeal of enactments and it does not save any delegated legislation. In this regard, he referred the judgments rendered in Kolhapur Canesugar Works Ltd. V. Union of India (2000) 2 SCC 536, Para 32; Punjab National Bank v. Union of India, (2022) 7 SCC 260, Paras 41-41.3). Thus, in absence of the Rules, there is no machinery provisions inter alia to demand, collect and recover Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purposes of compensating the States for the loss on account of implementation of GST. It is noted that National Clean Energy Fund ( NCEF ) was constituted for the purposes of collecting the amount of Clean Energy Cess. It is submitted that Ministry of Environment, Forest and Climate Change in its Thirtieth Report presented to the Lok Sabha on 13.12.2018 raised concerns that amount collected as Clean Energy Cess has been made part of GST Compensation Fund to compensate the States resulting in shortfall with the NCEF. Learned counsel further referred relevant pages from the Ministry of Environment, Forest and Climate Change s Thirtieth Report dated 13.12.2018. It is further submitted that had the legislature intended to levy Clean Energy Cess and GST Compensation Cess on the same transaction, the legislature would not have repealed the Chapter VII of the Finance Act, 2010. Therefore, the intention of legislature was to replace Clean Energy Cess with GST Compensation Cess. This is evidenced from the fact that the amount collected as Clean Energy Cess has been diverted for the objectives of GST Compensation Cess. Thus, GST Compensation Cess and Clean Energy Cess cannot be le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitutional validity of Compensation Cess Act 2017 but on going through this case law, it can be gathered that there is no ambiguity regarding liveability of Clean Energy Cess (Clean Environment Cess) on the coal lying in stock on 30.06.2017. (ii) He further submits that Section 6 of the General Clauses Act will save the Cess Rules as Regulation include Rules, inasmuch as, levy is already created by section 83(3) of finance act, 2010 on production of coal before 01-07-2017. Learned counsel for the respondents also relied on the decision of Hon ble Supreme Court in the case of Gammon India Ltd. V. Spl. Chief Secretary and Ors. (2006) 3 SCC 354 (iii) Learned ASGI further contended that Section 18(2) of the Taxation Laws (Amendment) Act, 2017 would save the liabilities already acquired, accrued or incurred. Therefore, the Cess will be payable on coal produced before 01.07.2017. Since the repeal of Clean Energy Cess (Chapter VII of Finance Act, 2010) was effective from 01-07-2017, any liability of CEC accrued on the production of Coal as on 30-06-2017 was payable in terms of the saving clause mentioned above. Therefore, the contention of the petitioner that the interpret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand of clean environment cess on the closing stock of specified goods as on 30.06.2017 is legal and sustainable and the contention of the petitioner is incorrect. (iv) Further, the Notification No. 2/2010-Clean Energy Cess Borrows Section 11A and Section 11AA. Therefore, provisions pertaining to interest and recovery have been borrowed. (v) Learned ASGI also contended that the Cess is distinguishable from excise duty. Therefore, exemption under Notification No. 12/2017-Central Excise will not be applicable to the petitioner. In this regard he relied upon the decision of learned CESTAT in the case of M/s. ACC Ltd. V. Commissioner of C.G.ST CE. 2019 (31) G.S.T.L 103 (Tri-Del). (vi) He lastly submits that Section 5 of the Central Excise Act, 1944 provides for remission of duty on excisable goods which are found deficient in quality or destroyed due to natural causes. As there is a provision for remission for goods lost or destroyed within factory. Petitioner s argument that duty is payable on removal of goods cannot sustain. Relying upon the aforesaid submissions, learned ASGI prays for dismissal of the instant writ application. 11. Having heard lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gy initiatives, funding research in the area of clean energy or for any other purpose relating thereto. (4) The proceeds of the cess levied under sub-section (3) shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of the money of the cess for the purposes specified in sub-section (3), as it may consider necessary. (5) The cess leviable under sub-section (3) shall be in addition to any cess or duty leviable on the goods specified in the Tenth Schedule under any other law for the time being in force. (6) The cess leviable under sub-section (3) shall be for the purposes of the Union and the proceeds thereof shall not be distributed among the States and the manner of assessment, collection, utilisation and any other matter relating to cess shall be such as may be prescribed by rules. (7) The Central Government may, by notification in the Official Gazette, declare that any of the provisions of the Central Excise Act, 1944 (1 of 1944), relating to levy of and exemption from duty of excise, refund, offences and penalties, confiscation and proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or before 28-2-1979 are removed on or after 1-3-1979, what would be the rate of duty (and which would be relevant date for valuation purposes); the assessee may say that on the date of removal, neither the levy is in force nor are Rules 9 and 9-A and, hence, he need not pay any special excise duty on such goods. We do not see any valid basis for this apprehension. In the situation contemplated by Shri Vellapally, the date of removal has to be taken as 28-2-1979. It cannot be otherwise. If Rules 9 and 9-A are held inapplicable, it would logically follow that the moment the goods are manufactured, the levy becomes payable and, in the circumstances, the last date of levy can reasonably be taken to be the date of removal. Of course, an absurd consequence would follow if it is held that in the above situation, no special excise duty is payable if the removal is on or after 1-3- 1979. Such an absurd consequence could not be presumed to have been intended by Parliament. 12. We are of the opinion that Section 3 cannot be read as shifting the levy from the stage of manufacture or production of goods to the stage of removal. The levy is and remains upon the manufacture or product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided that the words as being subject to a duty of excise appearing in Section 2(d) of the Act are only descriptive of the goods and not to the actual levy. Excisable goods , it was held, do not become non-excisable goods merely by the reason of the exemption given under a notification. This view was also taken by the Madras High Court in Tamil Nadu (Madras State) Handloom Weavers Cooperative Society Ltd. v. Assistant Collector of Central Excise [(1978) 2 ELT (J) 57 (Mad)] . On the basis of Rule 9-A of the said rules, the Central Excise authorities were within the competence to apply the rate prevailing on the date of removal. we are of the opinion that even though the taxable event is the manufacture or the production of an excisable article, the duty can be levied and collected at a later date for administrative convenience. 16. Before we conclude, it is necessary to notice a few facts having a bearing upon the relief to be granted in these matters. The special excise duty was being levied from 1963 up to 1971 by various Finance Acts passed from time to time. It was discontinued from 1972 until 1978 when it was revived by the Finance Act, 1978. Thereafter, it was be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, 2010 itself provides for levy , collection and rates of tax at tenth schedule. As per Section 83, the levy of duty is on the production of Coal. Rules 4 Rule 6 of Cess Rules specifies the procedure that the Cess is payable by 5th of the second month. The Rule does not specify that the Cess is to be paid at the rate applicable at the time of removal. The rate is already provided in Section 83(3) itself unlike Section 3 of the Central Excise Act, 1944. Section 83(3) creates the levy, provides for its collection and also provides the rate. Therefore, respondent had the power to levy and collect Clean Energy Cess on the coal lying in stock as on 30.06.2017 at the specified rates which were produced when the said cess was in force. 15. Learned counsel for the Assessee contended that Cess Rules and Notification No. 2/2010 would not be saved by virtue of Section 6 of General Clauses Act, 1897 as Section 6 is only applicable to repeal of enactments and it does not save any delegated legislation. The aforesaid contention of the Assessee s counsel is not applicable in the given facts and circumstances of this case, inasmuch as, Section 83(3) of chapter VII of Finance Act, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This argument has also not impressed us in view of the fact that Cess Tax are two different components or aspects. A Cess is a form of Tax levied by the Government on Tax with specific purpose till the time the Government gets enough money for that purpose. It is different form usual Tax like excise and income Tax. In other words, a Cess is imposed as an additional Tax besides the existing Tax. Thus, the Cess on a particular commodity cannot come under the purview of double taxation and will not hit by Article 265 of the Constitution of India. In this regard, reference may be made to the Judgment rendered in the case of Mohit Minerals (Supra) wherein the Hon ble Apex Court has held in para-60 to 64 which is quoted herein below: 60. We, thus, answer Issue 2 and Issue 3 in following manner: Answer 2. The Compensation to States Act, 2017 does not violate Constitution (One Hundred and First Amendment) Act, 2016 nor is against the objective of the Constitution (One Hundred and First Amendment) Act, 2016. Answer 3. The Compensation to States Act is not a colourable legislation. Issue 4 : Whether levy of Compensation to States Cess and GST on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral in Council v. Province of Madras, 1945 SCC OnLine FC 5 : (1944- 45) 72 IA 91 : (1945) 7 FCR 179 at p. 193], in the context of concepts of Duties of Excise and Tax on Sale of Goods said: The two taxes, the one levied on a manufacturer in respect of his goods, the other on a vendor in respect of his sales, may, as is there pointed out, in one sense overlap. But in law there is no overlapping. The taxes are separated and distinct imposts. If in fact they overlap, that may be because the taxing authority, imposing a duty of excise, finds it convenient to impose that duty at the moment when the excisable article leaves the factory or workshop for the first time on the occasion of its sale. 64. Krishna Iyer, J. in Avinder Singh v. State of Punjab [Avinder Singh v. State of Punjab, (1979) 1 SCC 137], laid down that if on the same subject-matter the legislature chooses to levy tax twice over there is no inherent invalidity in the fiscal adventure unless there are some other prohibitions. In the above case the Government of Punjab had issued a notification under Section 90(4) of the Punjab Municipal Corporation Act, 1976 imposing tax at the rate of Rupee 1 per b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue is right is demanding the tax on production which was lying on stock as on the date of amendment and repeal of Clean Energy Cess for the sole reason that the taxable event was production and only the payment was deferred at the time of Removal. We hold that by virtue of Section 83(3) playability is created; and only the payment is deferred to be done in the manner provided in Rule 4 6. Accordingly, Issue No.(i) is decided in favour of Revenue. 17. Now coming on to the next issue as to whether in the facts and circumstance of this case the Revenue can take recourse of first proviso to section 11A(1)/section 11A(4) on the ground of suppression, fraud etc.; certain facts are required to be indicated here. The show cause issued by the Respondent in the instant case is dated 15th March 2019 taking recourse of 1st proviso to Section 11A(1) of the Central Excise Act, 1948. The reply to Show Cause notice was submitted on 29th April 2019 and the Adjudication Order has been passed on 29th February 2020. Since, the present case is an interpretational issue and petitioner was paying GST Compensation Cess with a bona-fide belief that Clean Energy Cess was not payable. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X
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