Credit of education cess and higher education cess taken through TRAN-1 to be recovered along with interest and penalty: CESTAT

Case Details: Suvikram Plastex Pvt Ltd. v. Commissioner Of Central Tax - [2021] 132 taxmann.com 1 (Bangalore - CESTAT)

Judiciary and Counsel Details

• • S.S. Garg, Judicial Member
  • Anirudha R.J. Nayak, Adv. for the Appellant. 
  • C.V. Savitha, Superintendent (AR) for the Respondent.

Facts of the Case

The appellant was engaged in the manufacture of excisable goods and was also registered with the Service Tax for payment of service tax on GTA, Business Auxiliary Service and Business Support Service. During the course of audit for the period from July 2014 to June 2015, the department observed that the appellant had irregularly transitioned the cenvat credit of education cess and secondary and higher education cess to GST. The SCN was issued by the department proposing to recover the ineligible cenvat credit relating to education cess and higher secondary education cess transitioned into GST along with interest and penalty. The adjudicating authority confirmed the demand and Commissioner (Appeals) rejected the appeal. It filed appeal before the CESTAT.

CESTAT Held

The Honorable CESTAT relied on the decision of Hon’ble Division Bench of the Madras High Court in the case of Sutherland Global Services (P.) Ltd. wherein it was held that assessee was not entitled to carry forward and set off of unutilised Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess against the GST Output Liability with reference to section 140 of the CGST Act, 2017. Therefore, the appellant had wrongly transferred the cenvat credit of education cess and higher education cess into TRAN-1 under GST and the amount was liable to be recovered from the appellant along with interest and penalty.

List of Cases Referred to

• • Orient Paper Mills Ltd. v. Union of India – 1978 (2) ELT J345 (SC) (para 4)
  • Shree Renuka Sugars Ltd. v. CCE 2007 taxmann.com 291 (Bang. – CESTAT) (para 4)
  • Sutherland Global Services (P.) Ltd. v. Asstt. Commissioner of CGST & CE [2019] 111 taxmann.com 264 (Mad.) (para 4)
  • Asstt. Commissioner of CGST & CE v. Sutherland Global Services (P.) Ltd. 2020 (10) TMI 804 (Mad.) (para 5)