M/S Ozone Ayurvedics vs. Union Of INDIA And 5 Ors.

Held

The Court held that the education cess and higher education cess paid by the petitioner are refundable. This decision was based on the consensus reached between the parties, acknowledging the binding precedent set by the Hon'ble Supreme Court in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati. The Supreme Court had previously ruled that these cesses are intrinsically linked to excise duty and should be refunded when the primary excise duty is exempted. The Court directed the respondents, specifically respondent Nos. 4 to 6 (Commissioner and Assistant Commissioner of Central GST/Excise), to calculate and refund the education cess and higher education cess paid by the petitioner from July 2004 to February 2015. The refund process is to be completed within five months from the receipt of a certified copy of the order.

Facts

The petitioner, M/s Ozone Ayurvedics, an industrial unit in Assam, sought a refund of education cess and higher education cess paid between July 2004 and February 2015. These cesses were levied in addition to excise duty as per the Finance Act of 2004. The petitioner was entitled to exemption from excise duty under the North East Industrial Policy of 1997. The core issue was whether these cesses, paid alongside the excise duty, were also refundable under the same policy. The petitioner relied on a Supreme Court judgment in M/s SRD Nutrients Private Limited vs. Commissioner of Central Excise, Guwahati, which held that education cess and higher education cess partake of the character of excise duty and are refundable when excise duty is exempted. The respondents, including the Union of India and GST authorities, agreed to this position.

Key Issues

1. Whether the education cess and higher education cess levied under the Finance Act of 2004 are part of the excise duty and thus refundable under the North East Industrial Policy of 1997, when excise duty itself is exempted. The petitioner argued that the Hon'ble Supreme Court in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati, has already held that education cess and higher education cess partake of the character of excise duty and are refundable when excise duty is exempted. The petitioner further relied on a Meghalaya High Court order dated 02.08.2018, which directed refund in a similar situation based on party agreement. The revenue (respondents) submitted, upon instruction, that following the Supreme Court's pronouncement 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 period July 2004 to February 2015.