North East Roofing PVT. LTD. vs. Union Of INDIA And 6 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. Consequently, when excise duty is exempted under the North East Industrial Policy, 1997, the education cess and higher education cess paid on such excisable goods are also refundable. This finding was based on the Supreme Court's judgment in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati. The Court noted the consensus reached between the parties, with the Revenue agreeing to refund the cesses in line with the Supreme Court's decision. The operative direction was for the respondent authorities (Nos. 4 to 6) to calculate and refund the education cess and higher education cess paid by the petitioner for the period April 2007 to March 2014, and for the months of June 2014 and February 2016, within five months of receiving a certified copy of the order. No issue was expressly left undecided.

Facts

The petitioner, North East Roofing Pvt. Ltd., 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 Policy of 1997. The core of the dispute was whether these additional cesses 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 education cess and higher education cess partake of the character of excise duty and are refundable when excise duty is exempted. The refund was claimed for the period April 2007 to March 2014, and for June 2014 and February 2016.

Key Issues

1. Whether the 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 Policy, 1997? (Question of law) Petitioner's arguments: The petitioner contended that the Hon'ble Supreme Court in M/s SRD Nutrients Private Limited –vs- Commissioner of Central Excise, Guwahati (judgment dated 10.11.2017) had definitively held that education cess and higher education cess are part of excise duty and thus refundable when excise duty itself is exempted. They also referred to a Meghalaya High Court order dated 02.08.2018, which directed a refund in a similar situation based on party agreement. Revenue's arguments: The Revenue, represented by the learned ASGI, upon instruction, conceded that in light of 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 specified periods.