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Exemption to E Cess & SHE Cess- Really Lucrative?

Service Tax - By: - Pradeep Jain - Dated:- 1-3-2015 Last Replied Date:- 30-12-1899 - Right from the common man to the corporates and foreign investors, where everyone was expecting the government to deliver a reform-oriented Budget, but the changes proposed in the Budget announced by the Hon ble Finance Minister took all the hopes in vain. Even before the cheer over the raising of tax exemption limit could have died down, Budget 2015 delivered a staggering blow by hiking the rate of service tax .....

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nd SHE cess. The Education Cess levied under section 91 read with section 93 of the Finance Act, 2004 on excise duty is being fully exempted vide notification no. 14/2015-CE dated 01.03.2015. Similarly, SHE Cess leviable under section 136 read with section 138 of the Finance Act, 2007 on excise duty is also being fully exempted vide notification no. 15/2015-CE dated 01.03.2015. However, with respect to Education Cess and SHE Cess levied on service tax under section 95 of the Finance Act, 2004 an .....

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viding exemption to levy of Education Cess and SHE Cess all of a sudden, that too, with respect to Excise and Service Tax only leaves many questions that remain unanswered and will only lead to litigation in days to come. Whether credit balance available as on 01.03.2015 to lapse? First and foremost question that arises in the minds of the assessees is that what will be the fate of the credit balance of Education Cess and SHE Cess pertaining to excise duty lying with them as on 01.03.2015 becaus .....

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t of Education Cess and SHE cess available with the manufacturers will become a sheer cost unless and until a clarification as regards disposal of the available cenvat credit balance of Education Cess and SHE Cess is issued by the government. One view that may be taken is that the balance of Education Cess and SHE Cess may be retained by the manufacturers and may be used if any demand is fastened against them for the prior period in future. Alternatively, one may also view that the intention of .....

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me. But the credit will not be available as there is no Education cess and SHE cess leviable on the final product. Similarly the education cess and SHE cess is payable on service tax. It will be discontinued on the date notified after the enactment of budget. But the credit of the same will not be available to manufacturers. This will add to cost of their goods. Whether discrimination between excise and service tax assessees proper? It is further submit that with the gap created in the grant of .....

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manufacturer assessees that avail input services, they will have to bear additional cost of Education Cess and SHE Cess levied on input services availed by them because they would be unable to utilise the same. But, the manufacturer who is service provider also will be saved from the absurd situation. This will be termed as step towards GST or step away from GST where the rates of service tax and excise are different and credit provisions will also apply differently for both of them. Whether rev .....

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4 are pursued, they warranted approximately 50% of the credit reversal because the rate of duty of excise and service tax was 12%. Consequently, the credit reversal under Rule 6(3)(i) was 6%. However, when the government has hiked the service tax rate to 14% (effectively 16% as there is 2% Swatch Bharat Cess) and has also hiked excise duty to 12.5%, then whether the rate of credit reversal of 6% will be proper or not is also another question that the government appears to have skipped. How to ap .....

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ified as 0 . However, for claiming the amount of abatement for the prior period, the manner of computation will be highly debatable and will be prone to litigation. In abatement, no cash refund is allowed but the manufacturer is allowed to adjust the duty in ensuing months. If so, the department will allow the abatement of education cess and SHE cess but it cannot be adjusted as there is Education cess and SHE cess on final product now. So, refund of the same in cash should be allowed. Whether a .....

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