M/S. Godrej Consumer Products LTD. vs. Union Of INDIA And 5 Ors

Held

The Court held that the education cess and higher education cess are part of excise duty, as per the Supreme Court's decision in M/s SRD Nutrients Private Limited. Therefore, the petitioner is entitled to a refund of these cesses for the period from July 2004 to May 2011, as the excise duty itself was exempted under the North East Industrial and Investment Promotion Policy, 2007. 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 within five months from the receipt of a certified copy of the order. The reasoning is based on the binding precedent set by the Supreme Court, which established the nature of education cess and higher education cess as being integral to excise duty. The ratio decidendi is that taxes levied as a percentage of excise duty, and characterized as such, are refundable when the underlying excise duty is exempted by a policy.

Facts

The petitioner, M/s. Godrej Consumer Products Ltd., an industrial unit in Assam, claimed exemption from excise duty under the North East Industrial and Investment Promotion Policy (NEIIPP), 2007. The policy allowed for exemptions for units commencing production after April 1, 2007, or those undertaking substantial expansion. The petitioner had paid excise duty, education cess, and higher education cess. While excise duty was refunded as per the policy, a question arose whether the education cess and higher education cess were also refundable. This issue was addressed by the Supreme Court in M/s SRD Nutrients Private Limited vs. Commissioner of Central Excise, Guwahati, which held that these cesses partake the character of excise duty and are thus refundable when excise duty is exempted. The petitioner sought a refund of education cess and higher education cess paid from July 2004 to May 2011.

Key Issues

1. Whether education cess and higher education cess are part of excise duty for the purpose of refund under the North East Industrial and Investment Promotion Policy, 2007? The petitioner argued that following the Supreme Court's decision in M/s SRD Nutrients Private Limited, they are entitled to a refund of the education cess and higher education cess paid, as these cesses are considered part of the excise duty which was exempted under the NEIIPP, 2007. They relied on the Supreme Court's judgment and a similar order from the Meghalaya High Court. The revenue (respondents) submitted, upon instruction, that they are bound to refund the education cess and higher education cess paid by the petitioner, in line with the Supreme Court's pronouncement in M/s SRD Nutrients Private Limited. They agreed to the refund.