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2024 (1) TMI 305 - HC - CustomsExemption from payment of GST compensation cess to SEZ unit - Section 26 of the SEZ Act - HELD THAT:- The tax so raised i.e., income tax, sales tax, excise tax etc., can be utilized for any public purpose i.e., for payment of salaries, infrastructure creation, developmental programmes etc. However a cess is though broadly a tax, it is a special kind of tax levied for some special purpose which will be levied as an increment to the existing tax. The cess is utilized for a specific purpose i.e., for education, health etc., depending the nature of the cess levied. Then duty is concerned, duty is a tax levied on goods and services produced within or imported into a country. Keeping the aforesaid distinction in view, when Section 26 of SEZ Act is perused, it is discernible that the word “duty” alone is used in the said section but not the word “cess”. More prominently U/s 26(1)(a), on which much reliance is placed by the petitioners, what is exempted is only duty of customs but not any cess much-less the GST Compensation Cess. In Section 7 the words “tax, duty and cess” are specifically and distinctly used and stated that any goods or services exported or imported or procured from the DTA by a SEZ unit or developer shall subject to such terms and conditions and limitations be exempt from payment of taxes, duties or cess under all enactments specified in the First Schedule. The sine qua non for application of Section 7 is that in order to get exemption, the enactment which imposes tax, duty or cess shall be mentioned in the First Schedule. Therefore, from the said section two things are clear. Firstly, the Goods and Services Tax (Compensation to States) Act, 2017 is not mentioned in the First Schedule of the Act and secondly, the words “tax, duty and cess” are differently mentioned. However, in Section 26(1)(a) the phrase “duty of customs” alone is mentioned. A conjunctive study of Section 26(1)(a), 2(zd) of SEZ Act, 2005 and Section 2(15) of Customs Act, 1962 would pellucidly tell that the phrase ‘duty of customs’ used in Section 26(1)(a) of SEZ Act only refers to duty leviable under Customs Act, 1962 but the said phrase does not include cess under GST Compensation Act. Petition dismissed.
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