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TMI Blog2020 (10) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... s" against the Output GST Tax Liability after the switch over of Indirect Taxation System to GST Regime with effect from 01.07.2017, which GST (Goods and Services Tax) levy subsumed within its fold 16 indirect taxes earlier leviable like Excise Duty, VAT, etc. 2. It may be noted that all the aforesaid three types of Cess were imposed by different Finance Acts which are enumerated hereafter and Education Cess and Secondary and Higher Education Cess were also abolished much before the enforcement of GST Regime with effect from 01.07.2017 and during the contemporary period of the levy of the Cess, they were allowed to be set off or adjusted under CENVAT Credit Rules against the Output Cess Liability only and no cross utilisation of the Cess was allowed to be set off against the normal excise duty or customs duty payable by the Assessee, even though the Cess imposed under the Finance Act were collected in the form of Duty or Tax, as the case may be, by reading mutatis mutandis the provisions of those parent enactments. 3. The fine distinction between Cess, Tax and Duty will also be discussed hereafter. But, by way of introductory remark, it can be stated here that while Cess is colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed: Provided that the registered person shall not be allowed to take credit in the following circumstances, namely:- (i) where the said amount of credit is not admissible as input tax credit under this Act; or (ii) where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date; or (iii) where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government. 3. Inserted by the CGST (Amdt.) Act, 2018 (31 of 2018), dt. 30.8.2018, w.r.e.f. 1-7-2017. (2) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, credit of the unavailed CENVAT credit in respect of capital goods, not carried forward in a return, furnished under the existing law by him, for the period ending with the day immediately preceding the appointed day in such manner as may be prescribed: Provided that the regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson, who was engaged in the manufacture of taxable as well as exempted goods under the Central Excise Act, 1944 (1 of 1944) or provision of taxable as well as exempted services under Chapter V of the Finance Act, 1994 (32 of 1994), but which are liable to tax under this Act, shall be entitled to take, in his electronic credit ledger, - (a) the amount of CENVAT credit carried forward in a return furnished under the existing law by him in accordance with the provisions of sub-section (1); and (b) the amount of CENVAT credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day, relating to such exempted goods or services, in accordance with the provisions of sub-section (3). (5) A registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law, subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid return is either an original return or a revised return where the credit has been reduced from that claimed earlier: Provided further that the registered person shall not be allowed to take credit unless the said amount is admissible as input tax credit under this Act: Provided also that such credit may be transferred to any of the registered persons having the same Permanent Account Number for which the centralised registration was obtained under the existing law. (9) Where any CENVAT credit availed for the input services provided under the existing law has been reversed due to non-payment of the consideration within a period of three months, such credit can be reclaimed subject to the condition that the registered person has made the payment of the consideration for that supply of services within a period of three months from the appointed day. (10) The amount of credit under sub-sections (3), (4) and (6) shall be calculated in such manner as may be prescribed. Explanation 1.-For the purposes of 1[sub-sections (1), (3), (4)] and (6), the expression "eligible duties" means-- (i) the additional duty of excise leviable under section 3 of the Additional Duties of Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference: Rule 117. Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day.- (1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1, duly signed, on the common portal specifying therein, separately, the amount of input tax credit of eligible duties and taxes, as defined in Explanation 2 to section 140, to which he is entitled under the provisions of the said section: Provided that the Commissioner may, on the recommendations of the Council, extend the period of ninety days by a further period not exceeding ninety days. Provided further that where the inputs have been received from an Export Oriented Unit or a unit located in Electronic Hardware Technology Park, the credit shall be allowed to the extent as provided in sub-rule (7) of rule 3 of the CENVAT Credit Rules, 2004. (2) Every declaration under sub-rule (1) shall- (a) in the case of a claim under sub-section (2) of section140, specify separately the following particulars in respect of every item of capital goods as on the appointed day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of thirty per cent. and twenty per cent. respectively of the said tax; (iii) The scheme shall be available for six tax periods from the appointed date. (b) The credit of central tax shall be availed subject to satisfying the following conditions, namely:- (i) such goods were not unconditionally exempt from the whole of the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 or were not nil rated in the said Schedule; (ii) the document for procurement of such goods is available with the registered person; (iii) The registered person availing of this scheme and having furnished the details of stock held by him in accordance with the provisions of clause (b) of sub-rule (2), submits a statement in FORM GST TRAN 2by 31st March 2018, or within such period as extended by the Commissioner, on the recommendations of the Council, for each of the six tax periods during which the scheme is in operation indicating therein, the details of supplies of such goods effected during the tax period; (iv) the amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the common portal; a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "eligible duties" has been indicated in the "Rationale/ Remarks" column (at Sl. No. 37) of the draft proposals for amending the GST law which was uploaded in the public domain for comments. It is clear that the transition of credit of taxes paid under section 66B of the Finance Act, 1994 was never intended to be disallowed under section 140(1) and therefore no such remark was present in the document. iii) Under tax statutes, the word "duties" is used interchangeably with the word "taxes" and in the present context, the two words should not be read in a disharmonious manner. 3.2 Thus, expression "eligible duties" in section 140(1) which are allowed to be transitioned would cover within its fold the duties which are listed as "eligible duties" at sl. no. (i) to (vii) of explanation 1, and "eligible duties and taxes" at sl. no. (i) to (viii) of explanation 2 to section 140, since the expression "eligible duties and taxes" has not been used elsewhere in the Act. 3.3 The expression "eligible duties" under section 140(1) does not in any way refer to the condition regarding goods in stock as referred to in Explanation 1 to section 140 or to the condition regarding inputs and inpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it may consider necessary. 92. Definition. The words and expressions used in this Chapter and defined in the Central Excise Act, 1944 (1 of 1944), the Customs Act, 1962 (52 of 1962) or Chapter V of the Finance Act, 1994 (32 of 1994), shall have the meanings respectively assigned to them in those Acts or Chapter, as the case may be. 93. Education Cess on excisable goods. - (1) The Education Cess levied under section 81, in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), being goods manufactured or produced, shall be a duty of excise (in this section referred to as the Education Cess on excisable goods), at the rate of two per cent, calculated on the aggregate of all duties of excise (including special duty of excise or any other duty of excise but excluding Education Cess on excisable goods) which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue), under the provisions of the Central Excise Act, 1944 (1 of 1944) or under any other law for the time being in force. (2) The Education Cess on excisable goods shall be in addition to any other duties of excise chargeable on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vied under section 81, in the case of all services which are taxable services, shall be a tax (in this section referred to as the Education Cess on taxable services) at the rate of two per cent, calculated on the tax which is levied and collected under section 66 of the Finance Act, 1994 (32 of 1994). (2) The Education Cess on taxable services shall be in addition to the tax chargeable on such taxable services, under Chapter V of the Finance Act, 1994 (32 of 1994). (3) The provisions of Chapter V of the Finance Act, 1994 (32 of 1994) and the rules made thereunder, including those relating to refunds and exemptions from tax and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Education Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under Chapter V of the Finance Act, 1994 or the rules, as the case may be. THE SECOND SCHEDULE [See section 88(1)] Provision of the CENVAT Credit Rules, 2002 to be amended Amendment Date of effect of amendment (1) (2) (3) Explanation to clause (b) of subrule (6) of rule 3. In the CENVAT Credit Rules, 2002, in rule 3, in sub-r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to Krishi Kalyan Cess and the reason which apply to Education Cess and Secondary and Higher Education Cess will equally apply to Krishi Kalyan Cess also for the purpose of Section 140 of the CGST Act. The relevant provisions of Central Excise Act and CENVAT Rules for availment and utilisation of CENVAT Credit 14. Section 37 of the Central Excise Act, 1944, provides the power of the Central Government to make Rules and various Clauses of the Section 37 empowered the Central Government to frame the Rules with regard to various aspects of the Central Excise Law and our attention was drawn towards Clause (xxviii) thereof, which provides for Rules to be framed in regard to the lapsing of credit of duty lying unutilised with the manufacturer of specificied excisable goods on an appointed date and also for not allowing such credit to be utilised for payment of any kind of duty on any excisable goods on and from such date. CENVAT Credit Rules 2004 15. Rule 3 of the CENVAT Credit Rules, 2004, provides that a manufacturer or a purchaser of final products or a provider of output service shall be allowed to take credit (hereinafter referred to as CENVAT Credit) of the specified duties i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Education Cess and Secondary and Higher Education Cess which could not be set off by the Assessee during the contemporary period prior to 30th June 2017, cannot be allowed to be carried forward under the transitory provisions of Section 140 of the CGST Act, because it became a dead claim of the Assessee and since the levy of Cess was not continued after 2015 nor such levy was subsumed in the listed 16 taxes which were subsumed under the GST law, the credit in respect of such Cess could not be claimed against the Output GST liability. She emphasised that since Cess was collected for a specific and dedicated purpose by the Central Government and such levies imposed by the Finance Act, 2004 and 2007 respectively and the purpose of giving the input credit in respect of the same against the output Cess liability was only to remove the cascading effect and which is the bedrock of such Input Tax Credits in the indirect taxation system was not available, as Output Cess Liability ceased, therefore, the untilised portion of such CENVAT credit in the form of Education Cess and Secondary and Higher Education Cess became a dead claim after such levies were dropped in the year 2015 and unli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CENVAT Credit Rules 2004 provided that the credit of the Education Cess on excisable goods and on taxable services could be utilised either for payment of Education Cess on excisable goods or for the payment of Education Cess on taxable services. e. The second proviso to Rule 3(7)(b) of the CENVAT Credit Rules provided that the credit of Secondary and Higher Education Cess on excisable goods and on taxable services can be utilised either for payment of Secondary and Higher Education Cess excisable goods or for the payment of Secondary and Higher Education Cess on taxable services. f. Similarly Rule 3(7)(d) provided that the CENVAT credit pertaining to Krishi Kalyan Cess on taxable services levied under Section 161 of the Finance Act 2016 shall be utilised only towards the payment of Krishi Kalyan Cess on taxable services. g. Thus from the inception of the Education Cess, Secondaryand Higher Education and Krishi Kalyan Cess the intention of the statute was to allow the credit utilisation of CENVATCredit pertaining to these cesses only as against the respective cesses levied on excisable goods or output taxable services. This position continued till 2015. h. Thus cross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax on any output service. v. The 50% balance credit of Education Cess and Secondary and Higher Education Cess paid on capital goods received in the premises of the provider of output service in the financial year 2014-15 can be utilized for payment of service tax on any output service. vi. CENVATCredit of Education Cess and Secondary and Higher Education Cess paid on input service in respect of which the invoice, bill, challan or Service Tax Certificate for Transportation of Goods by Rail is received by the provider of output service on or after the 1st day of June, 2015 can be utilized for payment of service tax on any output service. m. The newly added provisos was a Special Purpose Vehicle for a limited period to give the benefit of cross utilisation as against excise duty and service tax only with regard to inputs and inputs services received on or after cut of date namely 01.03.2015 and 01.06.2015. n. Notifications 12 of 2015 and 22 of 2015 were challenged before the Hon'ble Delhi High Court in the case of CellularOperators Association of India v UOI[Reported in 2018 (14) GSTL 522, (2018) 51 GSTR 338 (Del),MANU/DE/0710/2018]. o. Thus the Hon'ble Delhi High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax, Company Range-III [ (2019)310C TR(Mad)746, [2019]414ITR196(Mad)]. c. It is submitted that as held by the Hon'ble Apex Court, if the Statement of Objects and Reasons spells out the essential purpose which the enactment seeks to achieve or if the AmendingAct introducing the levy of cess spells out the specific purpose in which the levy has been introduced, then the subject levy has to be construed only as a fee and not a tax. d. Section 91 of the Finance Act, 2004 which introduced the levy of Education Cess specifically provides that the levy of Education Cess is provide funds for basic education. Similarly Section 136 of the Finance(Amending Act) 2007 specified the purpose viz to provide funds and infrastructure for medium and higher education. e. It is submitted that the other requirement that the fund is set apart and appropriated specifically for the performance of specified purpose and is not merged with benefit of the general public is also there in the present case. f. The contention of the respondent-assessee by placing reliance on the decision in Hingir Rampur Coal Company Ltd. v. State of Orissa MANU/SC/0037/1960 : 1961 (2) SCR 537 that the Education Cess, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redited into the Madhyamik &Uchhatar Shiksha Kosh (MUSK). * Further sub para (c) of para 2.8 categorically states that the cess would be utilised in the ongoing schemes of Secondary and Higher Education. * Sub para (e) of para 2.8 specifies that the Madhyamik &Uchhatar Shiksha Kosh (MUSK) would be maintained as a reserve fund in the non interest bearing section of the Public Accounts of India. * Para 2.9 mentions the actual fund allocations to be provided under the Madhyamik &Uchhatar Shiksha Kosh (MUSK). * Similarly para 2.10 of the Standing Committee report gives elaborate details about the Prarambhik Shiksha Kosh (PSK) that was credited in the year 2006. * It also states very specifically that the Prarambhik Shiksha Kosh (PSK) fund is maintained by the Ministry of Human Resource Development and that the transfer to the Prarambhik Shiksha Kosh (PSK) account are made by the Ministry of Finance after approval by the Parliament. * Para 2.11 has also given the year wise chart on allocation and utilisation of education cess collected. It is further submitted that this point could not be brought to the notice of this Hon'ble Court during the oral arguments as the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2017 cannot include the CENVAT Credit pertaining to Education Cess, Secondary and Higher Education Cess and Krishi KalyanCess as these are additional levy and had not been specifically provided in the Section. d. It is submitted therefore that the argument of the respondent herein that the extension of the applicability of Explanation 1 to Section 140(1) has not been brought into effect and hence the term "eligible duties" should be allowed to include cesses, is wholly untenable. e. Explanation (3) to Section 140 also makes it categorical that the intention of the Legislature was never to transitioned the CENVAT Credit pertaining to cesses. LEGAL PROPOSITION IV :- Cesses Cannot be Cross Utilised as against duties or taxes: a. The respondent-assessee herein has placed reliance on the decision of the Hon'ble Supreme Court inEicher Motors Ltd. v. UOI [ 1999 (106) ELT 3 (SC). The contention of the respondent-assessee herein is that the CENVATCredit pertaining to Education Cess, Secondary and Higher Education Cess had already been availed as on 01.03.2015 and 01.06.2015 respectively but could not be utilised as cross utilisation with respect to excise duty and service tax w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arity in the two subsectionsare that in both the subsections the provisions speak about regular tax payers who have been in the CENVAT chain all along and who have excess credit in the last return of the erstwhile law preceding the date of inception of GST viz 01.07.2017. The difference between the two subsectionsis that while subsection (1) takes in its hold, manufacturers and service providers with single registration,subsection (8) deals with the centralised registration that was one of the norms in the service tax registration. First provision to subsection(8) of Section 140 further provides a leverage of 3 months to such assessee to transitioned the credit even postinception of GST. The other subsection deals with other specified circumstances, exempt goods or services in the earlier regime. b. However, the commonality in all the subsections except subsection (8) the phrase used is either "CENVAT Credit of the eligible duties" or "CENVAT Credit of eligible duties and taxes".The term "of eligible duties" or "of eligible duties and taxes" is not there in subsection (8) of section 140 of the CGST Act, 2017. Thus, the contention of the respondent is that they fall under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court,three condition are necessary to employ the doctrine of purposive interpretation in place of literal interpretation :- 1. Whether the reading of the whole statuteor provision would determine precisely what the mischief was, the purpose of the act of was to remedy. 2. That the draftsman and Parliament had by inadvertent overlooked and omitted to deal with the eventuality that required to be dealt with, if the purpose of the Act is to be achieved. 3. It was possible to state with certainty what would be the additional word that would have been inserted by the draftsman and approved by the Parliament before the bill passed into law. h. Applying the doctrine of purposive interpretation to subsection(8) of section 140, the appellant submits that the three-condition laid down above are satisfied. 1. The purpose of section 140 was to transition only the subsumed duty and taxes which were in existence as on 01.07.2017 and it was never the intention to transition the cesses which have been abolished much prior to 01.07.2017. 2. The draftsmen by inadvertencehad overlooked the phrase "of eligible duties" and the omission is not intentional. 3. It can be said with certainty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e such credit of the Education Cess and Secondary and Higher Education Cess, even after the introduction of GST Regime with effect from 01.07.2017. He submitted that such Cess was collected in the form of duty and taxes only and therefore, even though they were imposed by the Finance Act, the collection of levy was in the nature of duty or tax and the same was liable to be set off and utilised against the Output Tax Liability. 23. Though the learned counsel for the Assessee admitted that cross utilisation of Cess against the Output Tax Liability of Excise Duty and Service Tax prior to introduction of GST Regime on 01.07.2017 was not permitted as per Rule 7 of the CENVAT Rules, 2004 and Cess could be set off only against the Output Levy of Cess while the said imposition was operating, but, nonetheless, the CENVAT Credit in respect of such Cess, which was not so far utilised and such credit was carried forward in its Electronic Ledger which was submitted in the form of TRAN-1 Form as required in the new GST provisions was never objected to by the Revenue authorities until the impugned communication was issued to the Assessee on 14.02.2018 which led to the filing of the writ petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the period ending June 2017. This is an undisputed fact. A.2 The factum of valid availment (act of taking credit - does not denote utilization or adjustment) of the impugned Cess credit is undisputed. A.3 Hence, the eligibility to the impugned Cess credit till 30th June 2017 cannot be disputed. (Refer para A.11 below) A.4 The credit which is validly availed under the erstwhile laws (here, Cenvat Credit Rules, 2004) and lying unutilized as on 30 June 2017 can be transitioned into the GST regime only through Section 140 of the CGST Act. In other words, Section 140 of the CGST Act is the only provision which provides for the mechanism of transitioning credits eligible under the erstwhile laws into the GST regime. Each sub-Section of 140 deals with a specific scenario A.5 The said provision consists of several sub-sections, each of which is in relation to a specific independent scenario of transition. The following table would illustrate the purpose of each sub-Section of Section 140. Sub-Section Purpose 140(1) Transition of already availed cenvat credit reflected in the last Returns filed under the erstwhile laws. It is based on credit availed and remaining unutili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enabling seamless transition of credit. A.7 While Section 140(1) governs a situation of transition of credits lying unutilized in the last return filed under erstwhile laws, a very similar phraseology is also available in Section 140(8). The only difference between Section 140(1) and Section 140(8) is that sub-Section (8) deals specifically to a case of dealers having centralized registration while sub-Section (1) does not have such qualification. If both the provisions are to be construed harmoniously so that no provision is rendered otiose, then Section 140(1) should be read as covering all scenarios other than the case of dealers having centralized registration. Thus, both the provisions can co-exist, have its full play and no part of any provision be rendered redundant. Reliance in this regard is placed on CCE v. Universal Ferro and Allied Chemicals Ltd. 2020 5 SCC 332 [paragraph 46 to 48] A.8 Since the assessee was having a centralized registration, the assessee's case would be squarely covered by Section 140(8) being a specific provision as compared to Section 140(1). A.9 Section 140(8) of the CGST Act states that a registered person having centralized registration und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 140(1) vide Central Goods and Services Tax (Amendment) Act, 2018 ('Amendment Act'), it has deliberately chosen not to amend sub-Section (8). Hence, a purpose and intent behind the non-amendment should be imputed and thereby the wisdom of the Legislature should be respected. Therefore, the said expression 'eligible duties' ought not to be read into the provision. Reliance is placed on decision of P.M. AshwathanarayanaSetty v. State of Karnataka, 1989 Supp. (1) SCC 696 [Paragraph 30] to state that legislative wisdom ought not to be questioned. It cannot be merely ignored as an oversight by the Legislature as was submitted by the Appellant Department. A.14 Further, it is a settled position that Courts do not read words and expressions not found in the provision/statute as it would amount to venturing into a kind of judicial legislation. Reliance in this regard is placed on Union of India v. Ind-Swift Laboratories Ltd. 2011 (265) ELT 3 (S.C.) and CIT v.Calcutta Knitwears (2014) 6 SCC 444 (paragraphs 29 to 31). Such an exercise would amount to a situation of casus omissus which is impermissible for the Courts to do. Therefore, these words cannot be supplied into the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 140(1) as well. B.3 The assessee submits that the true meaning of the term 'eligible duties' in Section 140(1) needs to be then examined. B.4 The term 'eligible duties' is defined in Explanation 1 to Section 140 as being applicable to transition of credit under Section 140(6). It is for this reason that it states that the same would mean the duties enumerated therein, paid on inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day. Though the Amendment Act proposed to extend it to Sub-sections 1,3 & 4 of Section 140(1) as well, the same is not in force as the Central Government has deliberately chosen not to notify it. Thus, meaning of 'eligible duties' in Explanation 1 to Section 140 cannot be extended to Section 140(1). It is reiterated that it is not a mere inadvertent error but a deliberate decision. Hence, the purpose of not notifying should be looked into. Therefore, the said expression 'eligible duties' in Section 140(1) ought not to be read as defined under Explanation 1 to Section 140, which is for a wholly different purpose and situation. B.5 Since Explanation 1 of Section 140 cannot be attracted and E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of any tax or impost, whether general or local or special and that the term 'tax' shall be construed accordingly. Department's Circular in No. 87/06/2019-GST dated 02.01.2019 states that the term duties and taxes are used interchangeably [paragraph 3.1.(iii) at page 30 of the paperbook dated 23rd January 2020]. Hence, Edu Cess and SHE Cess on taxable services and KKC, being in the nature of taxes, are also covered under the term 'eligible duties' in Section 140(1). B.11 Much reliance has been placed by the Appellant Department on UOI v. Modi Rubber Ltd. 1986 (25) ELT 849 (SC) and Unicorn Industries v. UOI 2019 (370) E.L.T. 3 (S.C.). At the outset it is submitted that the same are not relevant for the issue in hand. In Modi Rubber Ltd. case, the issue involved was whether exemption Notification issued under Rule 8(1) of Central Excise Rules can be borrowed for claiming exemption from special duties of excise levied under Finance Act, 1979. The Court held that the power to grant exemption under Rule 8(1) is only in respect of basic excise duty under the Excise Act. Therefore, any Notification issued under the said Rule cannot be read as extending the benefit to levies created und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas a fee is levied essentially for services rendered and as such there is an element of quid pro quo between the person who pays the fee and the public authority which imposes it. It further held that tax recovered by public authority invariably goes into the Consolidated Fund which ultimately is utilised for all public purposes, whereas a cess levied by way of fee is not intended to be, and does not become, a part of the Consolidated Fund. It is earmarked and set apart for the purpose of services for which it is levied. C.2 Reliance in this regard is also placed on the following cases. Case law Reference paragraph numbers Shinde Brothers v. Deputy Commissioner AIR 1967 SC 1512 26 to 31, 66 & 67 Tamilnadu Minerals v. Joint Commissioner (2019) 414 ITR 196 (Mad) 21 to 27 Shri Krishna Rubber Works v. UOI 1970 SCC Online Bom 90 30 to 42 C.3 Further, Hon'ble Karnataka High Court in the case of CCE v. Shree Renuka Sugars Ltd. 2014 (302) ELT 33 (Kar), while holding that Sugar Cess is in the nature of a tax/duty, held that if the cess levied and collected is credited to the Consolidated Fund of India and it has to be appropriated by the Parliament by law and then only the said amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... du Cess is initially credited into Consolidated Fund of India and that there is no correlation between the collection of Edu Cess and amount transferred into such PSK fund created. In respect of SHE Cess it states that there is neither a fund was designated to deposit the proceeds of SHEC thereto nor schemes identified on which the cess proceeds were to be spent. C.9 CAG Report for FY 2016-17 states that SHE Cess collected by Central Government is credited into Consolidated Fund of India without creation of even a reserve fund in the Public Account. It also shows shorttransfer into the specified funds under the Public Account in respect of Edu Cess and KKC. C.10 CAG Report for FY 2017-18 states that SHE Cess is retained in the Consolidated Fund of India, even though Madhyamik and Uchchtar Shiksha Kosh (albeit created contrary to procedure) Fund was created in August 2017. It further states that this Fund has not been made operationalized so far. C.11 The above CAG Reports evidence that the Impugned Cesses are retained in the Consolidated Fund of India or are merely accounted under a distinct treasury account name in the Public Account.Thus, it is submitted the Cesses having b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of law. Reliance in this regard is placed on Eicher Motors Ltd. v. UOI 1999 (106) ELT 3 (SC) and CCE v. Dai IchiKarkaria Ltd. 1999 (112) ELT 353 (SC). D.3 Further reliance is placed on the following cases wherein it has been held that credit validly availed is a vested right under money credit scheme and the assessee was allowed to be utilize such credit even after abolishing of the Notification providing for utilization of such credit. a. Rasoi Ltd. v. UOI (2004) 176 ELT 101 (Cal) at paragraph 11-13. b. Madhusudhan Industriesv. UOI (2014) 309 ELT 54 (Guj.) at para 12-14. There is no concept of implied lapsing. Credit once validly availed cannot be taken away without express authority of law. D.4 It is submitted that no provision is enacted to lapse the said CENVAT credit pertaining to the Impugned Cesses. Section 37(xxviii) of the Excise Act specifically confers powers on the Central Government to frame Rules for lapsing credits lying unutilized. Thus, lapsing of credits can happen only through framing of Rules for the purpose. It can never be through a mere implication. D.5 It is submitted that had the intention of the Central Government been to lapse such CENVAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was whether interest liability under Rule 14 of CCR would kick in from the date of taking CENVAT credit or from the date of utilization of such CENVAT credit taken. The relevant phrase in Rule 14 read as"Where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded". While holding that interest is payable from the date of taking CENVAT credit itself, the Hon'ble Court acknowledged that taking credit and that of utilization of such credit taken are two distinct transactions. It was also followed by this Hon'ble Court in CCE v. Sri Kumaran Alloys (P) Ltd. 2019 (365) ELT 305 (Mad.). E.3 Further reliance is also placed on Board Circular No. F. No. 137/72/2008-CX.4 dated 21.11.2008 wherein while discussing the effect of amendment to Rule 6(3) of CCR w.e.f. 01.04.2008, the Board has clearly admitted the difference between taking of CENVAT credit and its subsequent utilization. Reliance placed on Osram Surya and Uttam Steel line of decisions is misplaced. E.4 Reliance has been placed on Hon'ble Supreme Court decisions in Osram Surya Pvt. Ltd. v. UOI AIR 2002 SC 2194 and UOI v. Uttam Steel Ltd. (2015) 319 ELT 598 (SC) by the Appellant Department to sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of tax or fee) or any such reasons. E.8 Hence, it is submitted that the ratio of the said decision is not relevant to the facts of the present case. E.9 It is also submitted that restriction on cross-utilization under erstwhile regime has no bearing on the issue involved. Even National Calamity Contingent Duty, which is a Cess and contained similar restriction on cross-utilization under erstwhile regime has been allowed to transition into GST. Hence, it is submitted that a Cess whose crosshttp:// utilization was restricted being transitioned into GST is not alien and unheard of to the Appellant Department. In light of the above, it is submitted that this Hon'ble Court may be pleased to dismiss the Writ Appeal and/or pass any such orders as it may deem fit." Reasons for Cess being not eligible for carry forward, transition and set off against the Output GST Liability under Section 140 of the CGST Act, are as under. 27. Firstly, we may state that obviously, there is no intendment or equity about taxation and both the charging provisions as well as the exemption provisions in taxing statutes have to be strictly construed and the Golden Rule of Interpretation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uts held in stock and inputs contained in semi finished or finished goods held in stock on the appointed date i.e. 01.07.2017 will be eligible to be carried forward and adjusted against GST Output Tax Liability with reference to Explanation 1. Apparently, Education Cess and Secondary and Higher Education Cess or Krishi Kalyan Cess are absent from the seven categories in Explanation 1. Therefore, on a plain meaning, such three Cesses in question cannot be inserted in Explanation 1 to cover them for being carried forward with reference to Explanation 1 which applies for specified four Sub-sections of Section 140 of the Act. 31. Similarly, Explanation 2 refers to Sub-sections (1) and (5) of Section 140 even though the words "Eligible Duties and Taxes" jointly are not used in Sub-section (1) of Section 140, but are used only in Sub-section (5) of Section 140, and again the eight specified "Eligible Duties and Taxes", first seven are repeat of Explanation 1 "Duties" and the eighth one is Service Tax, eligible to be set off and carry forward under CGST Act, 2017. 32. A closer examination of Explanation 1 and Explanation 2 would indicate that while the first 7 items in Explanation 1 are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that such eligible duties and taxes will exclude an Cess which has not been specified in Explanations 1 and 2. We may point out here itself that for example, National Calamity Contingent Duty imposed in Section 136 of the Finance Act, 2001, though named it as duty was, in fact, a Cess and that fund was created to meet expenditure to manage any national calamity. But, set off thereof has been specifically allowed by the Legislature possibly because that levy imposed under the Finance Act, 2001 continued even after GST Regime was in force with effect from 01.07.2017. 36. But, as noted above, the imposition or levy of Education Cess and Secondary and Higher Education Cess and Krishi Kalyan Cess did not operate after 01.07.2017. Explanation 3, in our opinion, specifying that any kind of Cess will be excluded for the purpose of Section 140, makes the intention of the Legislature very clear and Sub-section (8) of Section 140, which was emphasized by the learned counsel for the Assessee before us, is not excluded from the effect and operation of Explanation 3, because the exclusion is of any Cess which has not been specified in Explanations 1 and 2, Education Cess and Secondary and Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ather synonymous in the context of controversy we are dealing with. Finally, what is important is whether the Assessee gets Education Cess, Secondary and Higher Education Cess transitioned under Section 140 of the CGST Act or not. It is like Input Credit being a Fruit, which if found to be spoilt or unfit for consumption, it has to be thrown and if it is still fresh and worthy of being kept and used, it has to be so used. In our opinion, Fruit of Input Credit of Education Cess and Secondary and Higher Education Cess became a spoilt fruit in 2015 itself and was not fit to be carried forward and consumed (adjusted) after 01.07.2017. 39. Carry forward in Electronic Ledger and filing of Form TRAN-1 will not confer any such right on the Assessee and as Lord Russell pointed out in an Income Tax matter in the case of BSC Footwear Ltd. v. Ridgway (Inpsector of Taxes) [(1972) 83 ITR 269] that the Income Tax Law does not march step by step in the divergent footprints of the accountancy provisions. Rightly so, mere accounting practice and accounting entries do not confer a right on the Assessee in the taxation laws much less a vested right which cannot be undone or curtailed by statutory pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Cess in the year 2015 did not take any action in the contemporary period, until the impugned communication was issued to the Assessee on 09.02.2018, which triggered the filing of the writ petition and asked the Assessee to reverse that entry in the Electronic Ledger, it does not mean that the Assessee became so entitled to carry forward even a dead claim of unutilised Education Cess and Secondary and Higher Education Cess against the Output GST Liability after 01.07.2017. The set off and such adjustments could be allowed only if it clearly fell within the definition of "Eligible Duties" or "Eligible Taxes and Duties" as defined in Explanations 1 and 2. On the contrary, Explanation 3 clearly excluded Cess to be so eligible for carry forward and set off. Therefore, there is no iota of doubt that Cess of any kind except National Calamity Contingent Duty (NCCD), which was so specified in Explanations 1 and 2 specifically could be allowed to be carried forward and adjusted against Output GST Liability. It may be noted here that this NCCD is allowed to be transitioned not as CENVAT credit, but because it is specifically included as "Eligible Duties" in Explanations 1 and 2 of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1944. Undoubtedly, by reason of Section 32(4) of the Finance Act, 1979 and similar provision in the other Finance Acts, Rule 8(1) would become applicable empowering the Central Government to grant exemption from payment of special duty of excise, but when the Central Government exercises this power, it would be doing so under Rule 8(1) read with Section 32(4) or other similar provision. The reference to the source of power in such a case would not be just to Rule 8(1), since it does not of its own force and on its own language apply to granting of exemption in respect of special duty of excise, but the reference would have to be to Rule 8(1) read with Section 32(4) or other similar provision. (Para 44) Union of India v. Modi Rubber Ltd. (1986) 4 SCC 66 : 1986 SCC (Tax) 781, followed. When the exemption is granted under the particular provision, it would not cover any other kind of duty of excise imposed under separate Acts. (Para 45) Union of India v. Modi Rubber Ltd. (1986) 4 SCC 66 : 1986 SCC (Tax) 781, followed. The Notification dated 9-9-2003 issued in the present case makes it clear that exemption was granted under Section 5-A of the 1944 Act, concerning additional d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Modvat) accrued to the Assessee on the date when they paid the duty on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or those goods existed. The Court held that Section 37 of the Act does not enable the Government to make Rule 57F(4A) to deny that right to the Assessee. Paragraph 6 of the said judgment is quoted below for ready reference. "6. We may look at the matter from another angle. If on the inputs the assessee had already paid the taxes on the basis that when the goods are utilised in the manufacture of further products as inputs thereto then the tax on these goods gets adjusted which are finished subsequently. Thus a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and therefore, we may have no hesitation to hold that the rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detail because no difference will be made even after the Assessee is treated as having taken the credit of Education Cess and Secondary and Higher Education Cess in its Electronic Ledger, but not having utilised it so far until 30th June 2017, because admittedly, the unutilised Education Cess and Secondary and Higher Education Cess could not be cross utilised against the usual Excise Duty payable under the Excise Act, but could be utilized only against the Output Education Cess and Secondary and Higher Education Cess leviable prior to 2015 before being dropped by the Finance Act, 2015. 49. Hypothetically, assuming that such Education Cess or Secondary and Higher Education Cess was re-imposed by the Central Government in the Finance Act, 2016 or 2017 and there was some Output Education Cess or Secondary and Higher Education Cess liability of the Assessee, one could understand the claim of the Assessee of unutilised Input Cenvat in the form of Education Cess and Secondary and Higher Education Cess to be allowed to be set off against such Output Education Cess and Secondary and Higher Education Cess Liability re-imposed by subsequent enactment. But, such is not the case available bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services for which it is levied. There is, however, an element of compulsion in the imposition of both tax and fee. When the Legislature decides to render a specific service to any area or to any class of persons, it is not open to the said area or to the said class of persons to plead that they do not want the service and therefore they should be exempted from the payment of the cess. Though there is an element of quid pro quo between the tax- payer and the public authority there is no option to the tax-payer in the matter of receiving the service determined by public authority. In regard to fees there is, and must always be, corelation between the fee collected and the service intended to be rendered. Cases may arise where under the guise of levying a fee Legislature may attempt to impose a tax; and in the case of such a colourable exercise of legislative power courts would have to scrutinise the scheme of the levy very carefully and determine whether in fact there is a co-relation between the service and the levy, or whether the levy is either not co-related with service or is levied to such an excessive extent as to be a presence of a fee and not a fee in reality. In other wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int arose before this Court in respect of the Orissa Hindu Religious Endowments Act, 1939, as amended by amending Act 11 of 1952 in Mahant Sri Jagannath Ramanuj Das v. The, State of Orissa. Mukherjea, J., who again spoke for the Court, upheld the validity of Section 49 which imposed the liability to pay the specified contribution on every Mutt or temple having an annual income exceeding Rs. 250 for services rendered by the State Government. The scheme of the impugned Act was examined and it was noticed that the collections made under it are not merged in the general public revenue and are not appropriated in the manner laid down for appropriation of expenses for other public purposes. They go to constitute a fund which is contemplated by Section 50 of the Act, and this fund to which the Provincial Government contributes both by way of loan and grant is specifically set apart for the rendering of services involved in carrying out the provisions of the Act. 12. The same view was taken by this Court in regard to s. 58 of the Bombay Public Trust Act, 1950 (Act XXIX of 1950) which imposed a similar contribution for a similar purpose in Ratilal Panachand Gandhi v. The State of Bombay. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Act disallowed the delayed payment of only a "Tax, Duty, Cess or Fees" and not the "nomination charges" paid by the Mineral Company to the State. In the said judgment, the distinction between these four types of imposts and other related terms were discussed by the Division Bench in the following manner: "21.A little research into these imposts would be apposite here. These terms have the connotations delineated by Apex Court and Authors in the following manner: CESS 21.1.Means a duty in the nature of duty of excise and customs, imposed and collected on motor spirit commonly known as petrol and high speed diesel oil for the purposes of this Act, [Section 2(b), Central Road Fund Act, 2000 (India)]. 21.2.Is also a tax, but is a special kind of tax. Generally tax raises revenue which can be used generally for any purpose by the State, Vijayalashmi Rice Mill v. CTO, (2006) 6 SCC 763. 21.3.The term cess is commonly employed to connote a tax with a purpose or a tax allocated to a particular thing suggested by the name of the cess, such as health cess, education cess, road cess etc. This is a well settled position of law. However, it also means an assessment or levy. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the tax is not to confirm any special benefit upon any particular individual there is, as it is said, no element of "quid pro quo" between the tax payer and the public authority. (See Findlay Shirras on Science of Public Finance, Vol. 1). Another feature of taxation is that as it is a part of the common burden, the quantum of imposition upon the tax payer depends generally upon his capacity to pay, Commr., Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, AIR 1954 SC 282: 1954 SCR 1005: 20 Cut LT 250. 22.2. A tax is undoubtedly in the nature of a compulsory exaction of money by a public authority for public purposes, the payment of which is enforced by law. But the other and equally important characteristic of a tax is, that the imposition is made for public purpose to meet the general expenses of the State without reference to any special advantage to be conferred upon the payers of the tax, Ratilal Panachand Gandhi v. State of Bombay, AIR 1954 SC 388: 1954 SCR 1055: 56 Bom LR 1184. 22.3.An impost; a tribute imposed on the subject; an excise; tallage. The general principles of taxation are these: - (1) The subjects of every estate ought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or devices by which revenue is extracted from persons and property. The term "tax" is to be read in all embracing and sweeping sense. Such methods or device used by the Government from time to time are not ordinarily open to serious questions but their scope and application vary according to the nature of the subject under discussion and the circumstances under which they are used. (Para 47), State of U.P. v. Jaiprakash Associates Ltd., (2014) 4 SCC 720. 24.Taxation and impost - "Taxation" includes the imposition of any tax or impost, whether general or local or special and "tax" shall be construed accordingly. Though it is not an exhaustive definition and only shows what is included in the word one is struck immediately by its width of language. Though it speaks of any tax or impost, it goes a step further and adds "whether general or local or special", indicating thereby that no special or local considerations are relevant and even a general non discriminatory levy must be regarded as taxation. The definition of taxation speaks of impost. The word "impost" in its general sense means a tax or tribute or duty and may be on persons or on goods. In a special sense it means a duty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e met out of the amounts collected there being a reasonable relation between the levy and the expenses incurred for rendering the service, the levy would be in the nature of a fee and not in the nature of a tax. It is true that ordinarily a fee is uniform and no account is taken of the varying abilities of different recipients. But absence of uniformity is not a criterion on which alone it can be said that it is of the nature of a tax. A fee being a levy in consideration of rendering service of a particular type, correlation between the expenditure incurred by the Government and the levy must undoubtedly exist, but a levy will not be regarded as a tax merely because of the absence of uniformity in its incidence or because of compulsion in the collection thereof, nor because some of the contributories do not obtain the same degree of service as others may, Sudhindra Thirtha Swamiar v. Commr., Hindu Religious and Charitable Endowments, AIR 1963 SC 966, 975: 1963 Supp (2) SCR 302. 26.2.In fees there is always an element of "quid pro quo" which is absent in a tax. Two elements are thus essential in order that a payment may be regarded as a fee. In the first place, it must be levied i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ashok Singh v. CED, (1992) 3 SCC 169. 28.3.Levy includes not only the imposition of the charge but also the whole process up to raising of the demand, Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536. 28.4.The term "levy" is wider in its import than the term "assessment". It may include both "imposition" as well as "assessment", CCE v. Smithkline Beecham Consumer Health Care Ltd., (2003) 2 SCC 169. 28.5.The act of raising money or men. [Wharton?s Law Lexicon.] 28.6.The term "levy" it is held, is an expression of wide import. It includes both imposition of a tax as well as its quantification and assessment, Ujagar Prints (2) v. Union of India, (1989) 3 SCC 488. 29.Levy and collect - In taxing statute the words "levy" and "collect" are not synonymous terms, while "levy" would mean the assessment or charging or imposing tax, "collect" would mean the physical realisation of the tax which is levied or imposed. Collection of tax is normally a stage subsequent to the levy of the same. The enforcement of levy could only mean realisation of the tax imposed or demanded, Somaiya Organics (India) Ltd. v. State of U.P., (2001) 5 SCC 519. 30.Levy and collection - While th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar right and payable proportionately to the use made of the right by the grantee, State of Orissa v. Titaghur Paper Mills Co. Ltd., 1985 Supp SCC 280. 33.2."Royalty" according to Jowitts' Dictionary of English Law means "a payment reserved by the grantor of a patent, lease of a mine or similar right and payable proportionately to the use made of the right by the grantee", Distt. Council, Jowai Autonomous Distt. v. Dwet Singh Rymbai, (1986) 4 SCC 38. 33.3.Royalty in general connotes the State's share in the goods upon which the rights of its exploitation are conferred upon any person or the group of persons. If the royalty cannot be claimed by any individual, much less the controversial items being its attribute, even if assumed, can be claimed by a citizen, State of H.P. v. Raja Mahendra Pal, (1999) 4 SCC 43. 33.4.In the transaction of patent, royalty is a payment to a patentee by agreement on every article made according to his patent or to an author by publisher on every copy of his book sold or to the owner of mineral for the right of working the same on every tone or other weight raised, Pradeep C. Mody v. Sashikant C. Mody, AIR 1998 Bom 351. 33.5.Payment to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been a dead claim in the sense that it was already time barred before the amended Act with the larger period of limitation comes into force. The Hon'ble Supreme Court relied upon the earlier decision in this regard in the case of S.S. Gadgil v. Lal and Co. [AIR 1965 SC 171] in the following manner. "10. We have heard learned counsel for the parties and Shri Bagaria, the learned Amicus Curiae at some length. There is no doubt whatsoever that a period of limitation being procedural or adjectival law would ordinarily be retrospective in nature. This, however, is with one proviso super added which is that the claim made under the amended provision should not itself have been a dead claim in the sense that it was time barred before an Amending Act with a larger period of limitation comes into force. A number of judgments of this Court have recognised the aforesaid proposition. Thus, in S.S. Gadgil v. Lal and Co., MANU/SC/0122/1964 : AIR 1965 S.C. 171, this Court stated:- "13. As we have already pointed out, the right to commence a proceeding for assessment against the assessee as an agent of a non-resident party under the Income Tax Act before it was amended, ended on March 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be entitled to claim this credit 'until the dealer receives an original tax invoice duly filled, signed and issued by a registered dealer from where the goods are purchased .....'. Further, such original tax invoice should evidence the amount of input tax. So much so, even if the original tax invoice is lost, the obligation cast on the registered dealer is to obtain duplicate or carbon copy of such tax invoice from the selling dealer and only then input tax is allowed. From the aforesaid scheme of Section 19, following significant aspects emerge: (a) ITC is a form of concession provided by the Legislature. It is not admissible to all kinds of sales and certain specified sales are specifically excluded. (b) Concession of ITC is available on certain conditions mentioned in this Section. (c) One of the most important condition is that in order to enable the dealer to claim ITC it has to produce original tax invoice, completed in all respect, evidencing the amounts of input tax. 12. It is a trite law that whenever concession is given by statute or notification etc. the conditions thereof are to be strictly complied with in order to avail such concession. Thus, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our opinion, the unutilised Education Cess and Secondary and Higher Education Cess in the hands of the Assessee had become dead CENVAT Credit claim in the year 2015 itself with these levies dropped by the Finance Act 2015 and therefore, there is no question of it being claimed as a right to be carried forward and set off after 01.07.2017 against Output GST Liability. 55. We may also deal with the judgment of Division Bench of Delhi High Court relied upon by the Revenue in the case of Cellular Operators Association of India v. Union of India [(2018) 14 GSTR 338] decided on 15.07.2018 and also referred by the learned counsel for the Assessee in support of the submission that cross utilization of Education Cess and Secondary and Higher Education Cess towards Excise Duty and Service Tax was never permitted and the Delhi High Court repelled the challenge of the Cellular Operators Association of India to the Notification dated 29th October 2015, which was challenged on the ground that the extended benefit of that Notification was not given to the Cellular Operators and the credit accumulated on account of Education Cess and Secondary and Higher Education Cess should be allowed to them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, right had accrued on the date when the assessee had paid tax on the raw materials or inputs and the same would continue till the facility available thereto got worked out or until the goods existed. As noticed above, tax/duty had not been withdrawn. Lastly and more importantly, Section 37 of the Central Excise Tariff Act, 1985 did not enable the authorities to make the Rule impugned therein. The legal ratio in Eicher Motors Limited and Another (supra) was followed in Samtel India Limited (supra) wherein amended Rule 57-F(17) of the Central Excise Rules, 1944 was challenged. The Rules had postulated lapsing of credit in case of manufactured goods falling under sub-heading 8540.12, though the proviso had provided for credit of duty in respect of inputs lying in stock or contained in finished goods lying in stocks. It was held that the said scheme of credit of input tax, in view of amended provision, could not be made applicable to goods which had already come into existence and under which the assessee had claimed credit facility. As noticed above, in the present case, credit of EC and SHE could be only allowed against EC and SHE and could not be cross- utilized against the exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have lapsed. Therefore, that was a case wherein by introduction of the Rule a credit which was in the account of the manufacturer was held not to be available on the coming into force of that Rule, by that the right to credit itself was taken away, whereas in the instant case by the introduction of the second proviso to Rule 57-G, the credit in the account of a manufacturer was not taken away but only the manner and the time within which the said credit was to be taken or utilized alone was stipulated. It is to be noted at this juncture that the substantive right has not been taken away by the introduction of the proviso to the Rule in question but a procedural restriction was introduced which, in our opinion, is permissible in law. Therefore, in our opinion, the law laid down by this Court in Eicher case (1999) 2 SCC 361 does not apply to the facts of these cases. This is also the position with regard to the judgment of this Court in CCE v. Dai Ichi Karkaria Ltd.(1999) 7 SCC 448." 57. The Hon'ble Supreme Court in the case of Osram Surya held that Second Proviso inserted in the Central Excise Rules Rule 57G with effect from 29.06.1995 does not affect the substantive or vested righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot apply to the facts of these cases. This is also the position with regard to the judgment of this Court in Collector of Central Excise, Pune & Ors. V. Dai Ichi Karkaria Ltd. & Ors. [1997 (7) SCC 448]. 8. It is vehemently argued on behalf of the appellants that in effect by introduction of this Rule, a manufacturer in whose account certain credit existed, would be denied of the right to take such credit consequently, as in the case of Eicher (supra), a manufacturer's vested right is taken away, therefore, the Rule in question should be interpreted in such a manner that it did not apply to cases where credit in question had accrued prior to the date of introduction of this proviso. In our opinion, this argument is not available to the appellants because none has questioned the legality or the validity of the Rule in question, therefore, any argument which in effect questions the validity of the Rule, cannot be permitted to be raised. The argument of the appellants that there was no time whatsoever given to some of the manufacturers to avail the credit after the introduction of the Rule also is based on arbitrariness of the Rule, and the same also will have to be rejected on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Fuel and (f) Tobacco and Tobacco products. Except the aforesaid 16 taxes and duties specified in different enactments, no other tax or duty were subsumed under the new GST Regime with effect from 01.07.2017. 60. Obviously, the transition of unutilised Input Tax Credit could be allowed only in respect of taxes and duties which were subsumed in the new GST Law. Admittedly, the three types of Cess involved before us, namely Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess were not subsumed in the new GST Laws, either by the Parliament or by the States. Therefore, the question of transitioning them into the GST Regime and giving them credit under against Output GST Liability cannot arise. The plain scheme and object of GST Law cannot be defeated or interjected by allowing such Input Credits in respect of Cess, whether collected as Tax or Duty under the then existing laws and therefore, such set off cannot be allowed. 61. For these reasons also, in our opinion, the learned Single Judge, with great respects, erred in allowing the claim of the Assessee under Section 140 of the CGST Act. The main pitfalls in the reasoning given by the learned Single Judge are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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