Ozone Pharmaceuticals LTD. vs. Union Of INDIA And 5 Ors.

Held

The Court held that in view of the consensus reached between the parties, and following the pronouncement of the Hon'ble Supreme Court in M/s SRD Nutrients Private Limited vs. Commissioner of Central Excise, Guwahati, the respondents are bound to refund the education cess and higher education cess paid by the petitioner. The Supreme Court had concluded that education cess and higher education cess partake the character of excise duty itself. Therefore, when excise duty is exempted, these cesses are also entitled to be refunded. The Court directed the respondents (Department of Excise/Goods and Services Tax) to make appropriate calculations and refund the education cess and higher education cess paid by the petitioner from July 2004 to February 2015. The refund process was to be completed within five months from the receipt of a certified copy of the order.

Facts

The petitioner, Ozone Pharmaceuticals Ltd., 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 under the Finance Act of 2004, in addition to excise duty. The petitioner was entitled to exemptions from excise duty under the North East Industrial Policy of 1997. While excise duty refunds were processed, a question arose 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 the character of excise duty and are refundable when excise duty is exempted.

Key Issues

1. Whether education cess and higher education cess levied under the Finance Act, 2004, are to be considered part of excise duty for the purpose of refund under the North East Industrial Policy, 1997, particularly 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 Supreme Court in M/s SRD Nutrients had conclusively held that education cess and higher education cess are part of excise duty and thus refundable when excise duty itself is exempted. They sought a direction for refund of these cesses paid from July 2004 to February 2015, citing the Supreme Court's judgment and a similar order from the Meghalaya High Court. Revenue's contention: The Revenue, through the learned ASGI, submitted that following the Supreme Court's pronouncement in M/s SRD Nutrients, the authorities are bound to refund the education cess and higher education cess paid by the petitioner for the specified period.