M/S. Ozone Ayurvedics, Unit-Ii vs. The Union Of INDIA And 5 Ors.

Held

The Court held that the education cess and higher education cess levied under the Finance Act, 2004, partake of the character of excise duty itself. This finding is based on the Supreme Court's judgment in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati. Consequently, when excise duty is exempted from levy, the education cess and higher education cess paid along with it are also entitled to a refund. The Court noted the consensus reached between the parties, with the Revenue acknowledging its obligation to refund the cesses as per the Supreme Court's ruling. The Court directed the respondents (Department of Excise/Goods and Services Tax) to calculate and refund the education cess and higher education cess paid by the petitioner for the period 2011-2012 to 2014-2015 within five months of receiving a certified copy of the order. No issue was expressly left undecided.

Facts

The petitioner, M/s. Ozone Ayurvedics Unit-II, an industrial unit in Assam, sought a refund of education cess and higher education cess paid on excisable goods. These cesses were levied under the Finance Act of 2004, in addition to excise duty. The petitioner was entitled to exemption from excise duty under the North East Industrial and Investment Promotion Policy (NEIIPP), 2007, and had received refunds for excise duty paid. The core issue was whether the education cess and higher education cess were also refundable as part of the excise duty exemption. The petitioner relied on a Supreme Court judgment in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati, which held that these cesses partake of the character of excise duty itself and are thus refundable when excise duty is exempted. The period in dispute for the refund claim is 2011-2012 to 2014-2015.

Key Issues

1. Whether education cess and higher education cess levied under the Finance Act, 2004, are refundable when the underlying excise duty is exempted under the North East Industrial and Investment Promotion Policy, 2007, in light of the Supreme Court's decision in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati? Petitioner's contention: The petitioner argued that the education cess and higher education cess are an integral part of the excise duty and should therefore be refunded, relying on the Supreme Court's pronouncement in the SRD Nutrients case. They sought a direction for refund for the period 2011-2012 to 2014-2015. Revenue's contention: The respondents, represented by the learned ASGI, submitted that in light of the Supreme Court's judgment in M/s SRD Nutrients Private Limited, the authorities are bound to refund the education cess and higher education cess paid by the petitioner for the specified period.