Refund of Education Cess & SHEC admissible within one year of transition, as not transferable to GST: CESTAT

Case Details: Kirloskar Toyota Textile Machinery (P.) Ltd. v. Commissioner of Central Tax - [2021] 133 taxmann.com 56 (Bangalore - CESTAT)

Judiciary and Counsel Details

• • S.S. Garg, Judicial Member
  • Akbar Basha, CA for the Appellant. 
  • P. Gopakumar, Joint Commissioner (AR) for the Respondent.

Facts of the Case

The assessee was a manufacturer of parts and accessories of textile machinery and also renders the commissioning and installation services. It was engaged in the export of services without payment of tax under LUT and availing the benefit of Cenvat Credit facility under Cenvat Credit Rules, 2004. Since, it was engaged in export, there was an accumulated balance of unutilized credit of Education Cess (EC) and Secondary and Higher Education Cess (SHEC) available in the books.

With the introduction of GST, these credits of cess were restricted to be transitioned into GST by virtue of Section 140(1) of the Act. Accordingly, the assessee did not carry forward the accumulated credit of cess in FORM GST TRAN -1 to GST regime. It filed the refund application under section 11B of the Central Excise Act on June 29, 2018.

CESTAT Held

The Tribunal noted that the refund application was filed within a period of one year i.e. on 29/06/2018 from the introduction of GST law.

Further, the Tribunal also took note of a judgement of Karnataka High Court wherein it was held that when the assessee has moved out of Modvat Scheme/Cenvat Scheme, portion of unutilized credit should be allowed as refund. Based on the said judgement and the judgement of Division Bench of the CESTAT, New Delhi in the case of Bharat Heavy Electricals Ltd. case it concluded that the assessee is entitled to refund of an unutilized credit of Education Cess and Higher Education Cess after the introduction of GST.

List of Cases Referred to

• • Bharat Heavy Electricals Ltd. v. Commissioner of GST, CE & C [2020] 120 taxmann.com 363 (New Delhi – CESTAT) (para 3)
  • Eicher Motors Ltd. v. Union of India 1999 taxmann.com 1769 (SC) (para 3)
  • Samtel India Ltd. v. CCE 2003 taxmann.com 397 (SC) (para 3)
  • Union of India v. Slovak India Trading Co. (P.) Ltd. [2006] 5 STT 332 (Kar.) (para 3)
  • CCE&C v. Suresh Synthetics 2007 taxmann.com 1 (SC) (para 3)
  • CCE v. Gas Authority of India Ltd. 2008 taxmann.com 847 (SC) (para 3)
  • Commissioner of Customs v. Toyo Engineering India Ltd. 2006 taxmann.com 1488 (SC) (para 3)
  • Schlumberger Asia Services Ltd. v. Commissioner of CE & ST [2021] 127 taxmann.com 509 (Chd. – CESTAT) (para 3.1)
  • Bhavin Textiles v. CCE 2006 (194) E.L.T. 79 (Trib. – Mum.) (para 3.1)
  • CCE v. Apex Drugs and Intermediates Ltd. 2014 (314) E.L.T. 729 (Trib. – Bang) (para 3.1)
  • CCE v. Jain Vanguard Polybutlene Ltd. 2010 (256) E.L.T. 523 (Bom.) (para 3.1)
  • Bangalore Cables (P.) Ltd. v. CCE 2017 (347) E.L.T. 100 (Trib.-Bang.) (para 3.1)
  • Shalu Synthetics (P.) Ltd. v. CCE [2014] 47 taxmann.com 357/46 GST 676 (Ahd. – CESTAT) (para 3.1)
  • Century Rayon Twisting Unit v. CCE 2015 (325) E.L.T. 205 (Trib. -Mum.) (para 3.1)
  • CCE & C (Appeals) v. Kores (India) Ltd. 2009 (245) E.L.T. 411 (Trib. – Bang.) (para 3.1)
  • Siddharth Enterprises v. Nodal Officer [2019] 109 taxmann.com 62 (Guj.) (para 3.2)
  • Bharat Heavy Electricals Ltd. v. Commissioner of Central Tax [2020] 115 taxmann.com 32 (Hyd. – CESTAT) (para 4)
  • Mylan Laboratories Ltd. v. CCT & C [Central Excise Appeal No. 30591 of 2019, 25-2-2020] (para 4)
  • Gauri Plasticulture (P.) Ltd. v. CCE [2019] 30 GSTL 224 (Bom.) (para 4)
  • Banswara Syntex Ltd. v. CCE & ST 2019(365) E.L.T. 773 (Raj.) (para 4)
  • Asstt. Commissioner of CGST & CE v. Sutherland Global Services (P.) Ltd.[2020] 120 taxmann.com 295 (Mad.) (para 4)
  • Commissioner v. Andhra Sugars Ltd. 2015 (319) E.L.T. 297 (A.P.) (para 5)
  • J.K. Tyre & Industries Ltd. v. Asstt.CCE 2016 (340) E.L.T. 193 (Bang. – CESTAT) (LB) (para5).