Education Cess Lawfully Refunded To The Assessee, Can't Recover Later Based On Change Of View Of The Supreme Court: J&K and Ladakh High Court

The High Court of Jammu & Kashmir and Ladakh has ruled that the revenue department cannot seek the return of the amounts lawfully refunded to the assessee in consonance with an earlier decision of the Supreme Court, on the ground that the Supreme Court has changed its opinion on the said matter in a decision rendered subsequently. The Bench, consisting of Chief Justice Pankaj Mithal and Justice Sanjay Dhar, held that a case cannot be reopened after the expiry of the limitation period merely on the ground that subsequently the view of the court on the said aspect has changed or that subsequently a different opinion has been expressed by the courts in another case. The Court thus dismissed the appeals filed by the revenue department seeking recovery of the Education Cess and the Secondary & Higher Education Cess refunded to the assessee in accordance with the decision of the Supreme Court, which was operative at the relevant time. The Government of India issued Notification No. 56/2002-CE dated 14.11.2002 under the Central Excise Act, 1944 in context of the State of Jammu & Kashmir. The said Notification provided for 100% excise duty exemption to new industrial units for a period of 10 years from the date of commencement of production. Under the said Notification, the excise duty paid in cash was made refundable. Subsequently, with respect to the manufactured/produced goods, the Government of India also provided for levy of Education Cess and Secondary & Higher Education Cess vide the Finance Act, 2004 and the Finance Act, 2007 respectively, on the excise duty. The Commissioner (Appeals) passed an order denying the refund of Education Cess and Secondary & Higher Education Cess to the assessee M/s Narbada Industries. Against the said order, the assessee filed an appeal before the CESTAT. The CESTAT passed an order setting aside the orders passed by the Commissioner (Appeals) and directed the revenue authorities to refund the Education Cess and Secondary & Higher Education Cess to the assessee in view of the decision of the Supreme Court in the case of SRD Nutrients Pvt Ltd versus Commissioner of Central Excise, Guwahati (2017). The Commissioner, CGST and Central Excise filed an appeal against the order passed by the CESTAT before the High Court of Jammu & Kashmir and Ladakh. The High Court observed that after the issuance of the exemption Notification dated 14.11.2002, and after the levy of the Education Cess and Secondary & Higher Education Cess vide the Finance Act of 2004 and 2007 respectively, a dispute had arisen as to whether the Education Cess and the Secondary & Higher Education Cess were also required to be refunded as per the Exemption Notification. The Court noted that the said issue was resolved by the Supreme Court in the case of SRD Nutrients Pvt Ltd versus Commissioner of Central Excise, Guwahati (2017), wherein the Supreme Court had ruled that the Education Cess and the Secondary & Higher Education Cess levied on the excise duty partook the character of excise duty, and hence they could not be levied. The Court ruled that in view of the judgment of the Supreme Court in the case of SRD Nutrients Pvt Ltd versus Commissioner of Central Excise, Guwahati (2017), the CESTAT had held that the assessee was entitled to refund of Education Cess and the Secondary & Higher Education Cess. The Court observed that the revenue authorities had failed to challenge the said order passed by the CESTAT and had accepted the decision of CESTAT by proceeding to refund the said Cess to the assessee. The Court added that only after a contrary view was taken by the Supreme Court in the case of Unicorn Industries versus Union of India (2019), that the revenue department decided to file an appeal against the order of the CESTAT. The revenue department contended before the High Court that the occasion to file appeals against the order of the CESTAT arose only after the decision of the Supreme Court in the case of Unicorn Industries versus Union of India (2019) and that the appeals were filed by the revenue department within the prescribed limitation period from the date of the said decision. The revenue department averred that the orders passed by the CESTAT were based upon the judgment of the Supreme Court in the case of SRD Nutrients Pvt Ltd versus Commissioner of Central Excise, Guwahati (2017), which has been reversed by the Supreme Court in the case of Unicorn Industries versus Union of India (2019). Thus, the revenue department submitted that the appeals were filed by it to rectify the mistake of the Court. Therefore, the revenue department contended that it was entitled to get the delay condoned as the limitation period would begin from the date on which the said mistake had come to its notice, in view of Section 17 of the Indian Limitation Act, 1963. The Court ruled that the Central Excise Act is a special and ...

Education Cess Lawfully Refunded To The Assessee, Can't Recover Later Based On Change Of View Of The Supreme Court: J&K and Ladakh High Court

Parina Katyal

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