M/S. Parasnath Coke Industries vs. Union Of INDIA And 5 Ors.

Held

The Court directed the respondents, specifically respondent Nos. 4, 5, and 6 (Commissioner of Central GST, Assistant Commissioner GST, and Superintendent GST), to refund the education cess and secondary and higher education cess collected from the petitioner for the period of March 2011 to December 2015. This decision was based on the submission by the Additional Solicitor General that the competent authority had decided to refund such cess. The Court also took note of a previous identical order passed in WP(C) No. 5760 of 2018. The reasoning was that the revenue itself acknowledged the need for refund and had a policy decision to that effect. The ratio decidendi is that where a cess is levied on an exempted tax, and the revenue acknowledges the principle of refund, the cess collected should be refunded to the assessee. The operative direction was for the refund to be processed within three months of receiving a certified copy of the order.

Facts

The petitioner, M/s. Parasnath Coke Industries, an industrial unit in Assam, sought a direction from the Gauhati High Court to refund education cess and secondary and higher education cess collected from March 2011 to December 2015. The petitioner claimed entitlement to 100% refund of central excise duty under the North-East Industrial Policy, 2007, and a related notification. The petitioner argued that since excise duty itself was exempted, the cess levied on excise duty should also not be leviable. The petitioner relied on a previous identical case, WP(C) No. 5760 of 2018 (Kamakhya Plastics Pvt. Ltd –Vs- Union of India), decided on August 27, 2018, where the Court had directed a refund.

Key Issues

1. Whether the education cess and secondary and higher education cess are leviable on excise duty when the excise duty itself is exempted under the North-East Industrial Policy, 2007, and notification No. 20/2017 dated 24.04.2007? (Question of law) Petitioner's arguments: The petitioner contended that as the primary excise duty was exempted under the industrial policy, the cess, which is levied on excise duty, should also not be leviable. They relied on the principle that a cess on an exempted tax should also be exempted. Revenue's arguments: The learned Additional Solicitor General of India submitted that a decision had been taken by the competent authority in the Ministry of Finance to refund such cess irrespective of whether the assessee had approached the High Court.