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TMI Blog2024 (1) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... n 11AC of the Central Excise Act, 1944 read with Clean Energy Cess Rules, 2010 on the alleged closing stock of coal on June 30, 2017 and all the purported proceedings there under and/or relating thereto and/or in pursuance thereof and to act according to law; And; (ii) For issuance of appropriate writ(s)/ order(s), direction(s) for any Injunction restraining the respondents and each of their servants and/or agents and/or assignees to forebear from giving any effect and/or further effect to and/or acting on the basis of and/or in furtherance of the purported order dated 29/09/2020 and/or any purported proceedings there under and/or relating thereto and/or in pursuance thereof; And; (iii) During the pendency of this present writ application, it is humbly prayed that the operation of the order dated 29/09/2020 may be stayed. 3. The brief facts of the case as it appears from the writ application is that the petitioner is a subsidiary of Coal India Limited and is a Category-I Mini Ratna Company since 2007. In the instant writ petition the petitioner has challenged the order dated 29.09.2020 passed by respondent no. 3(Annexure- 3). By the said order, respondent no. 3 has conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, Cess was payable at Rs. 50 per tonne Cess paid at Rs. 50 for goods lying is stock on 30.06.2010 and removed subsequently 2. 11.07.2014 Notification No. 3/2010 was rescinded vide Notification No. 20/2014-CE dated 11.07.2014. Therefore, Cess was payable at Rs. 100 per tonne. Cess paid at Rs. 100 for goods lying is stock on 10.07.2014 and removed subsequently. 3. 01.03.2015 Vide Section 160 of Finance Act, 2015, the rate in the Tenth Schedule of Finance Act, 2010 was increased to Rs. 300. However, Notification No. 1/2015-Clean Energy Cess dated 01.03.2015 exempted duty in excess of Rs. 200. Therefore, Cess was payable at Rs. 200 Cess paid at Rs. 200 for goods lying is stock on 28.02.2015 and removed subsequently 4. 01.03.2016 Vide Section 235(ii) of the Finance Act, 2016, the rate in the Tenth Schedule of the Finance Act was increased to Rs. 400 and the Notification No. 1/2015-Clean Energy Cess was rescinded vide Notification No. 1/2016-Energy Cess dated 01.03.2016. Therefore, Cess was payable at Rs. 400 Cess paid at Rs. 400 for goods lying is stock on 29.02.2016 and removed subsequently 5. 01.07.2017 Chapter VII of the Finance Act, 2010 was repealed with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the impugned order confirms the demand of Cess under Section 11A of Central Excise Act, 1944 and Rule 6(5) of the Cess Rules. Firstly, Notification No. 2/2010-Clean Energy Cess which borrows Section 11A of the Central Excise Act, 1944 stood repealed by virtue of repeal of Chapter VII of the Finance Act, 2010. Secondly, the Rule 6(5) of the Cess Rules also stood repealed. Therefore, the impugned order has no legs to stand in the eye of law. The entire demand is without any authority of law and ex facie unsustainable. It is further submitted that in absence of machinery provisions for payment, collection, demand etc., the levy of Clean Energy Cess is unsustainable. He further relied upon the decision rendered in the case of Commissioner of Income Tax, Bangalore v. B.C. Srinivasa Setty, (1981) 2 SCC 460, Para 10, Tata Sky Ltd. V. State of MP, (2013) 4 SCC 656, Paras 30-31. 7. In support of ground No. III, learned counsel submitted that the demand in the present case has been confirmed under Section 11A of the Act read with Rule 6(4) of the Cess Rules. Further, the demand of interest has also been confirmed under Section 11AB/present section 11AA of the Central Excise Act; which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d No. V, learned counsel submitted that the respondent no. 3 has confirmed the demand by invoking extended period of limitation. The impugned order notes that there was a deliberate intent to evade the taxes. Learned counsel contended that the present case is an interpretational issue and petitioner was paying GST Compensation Cess with a bona-fide belief that Clean Energy Cess was not payable. Further, the petitioner has been filing regular returns under GST law for all the supplies of coal made after introduction of GST. Petitioner was not filing returns under Clean Energy Cess Rules with a bona fide belief that Clean Energy Cess was not payable. It has been submitted that these facts were in the knowledge of the respondents; however, despite said facts being in the knowledge of the respondents, show cause notice was issued almost after two years from the date Clean Energy Cess was repealed. Therefore, issuance of show cause notice dated 15.03.2019 is clearly an afterthought. Since, the instant case involves an interpretational issue, therefore in such circumstances, no penalty under Section 11AC can be levied. Therefore, demand of Cess under the extended period of limitation is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng clean energy cess is inherently faulty, is not sustainable in eye of law. The issue of payment of Clean Energy Cess on the stocks of coal as on 30-06- 2017 has been settled by the Hon'ble Apex Court in the case of (Mohit Minerals) Pvt Ltd 2018(17) GSTL 561 (SC). He further contended that the exemption Notification No. 12/2017-Central Excise dated 30-06-2017 exempts all excisable goods [except petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel, tobacco and tobacco products] from the whole of the duty of excise leviable thereon under the said Central Excise Act 1944 that have been manufactured on or before 30th June, 2017 but not cleared from the factory of production before the 1st July, 2017. But the Clean Energy Cess is a 'Cess' leviable under Section 83(3) of the Finance Act, 2010 and it is not a duty of excise leviable under Central Excise Act, 1944. The Clean Energy Cess was neither exempted vide notification No. 12/2017- CE dated 30-06-2017 nor vide any other notification. From perusal of Section 18(2), it is clear that such repeal, as laid down in Section 18(1), shall not affect obligations and liabilities. The non-obstante clause used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e affidavits and the averments made therein following issues arise for consideration before us:- (i) Whether the Revenue is entitled to levy Cess under Clean Energy Cess' 2010 which has been repealed by the GST Compensation Cess under the Goods & Services (Compensation to States) Act, 2017 ? (ii) If the Revenue is entitled to levy Cess under Clean Energy Cess' 2010 then as to whether in the facts and circumstance of this case the Revenue can take recourse of first proviso to section 11A(1)/ section 11A(4) on the ground of suppression, fraud etc. ? (iii) If the Assessee is liable to pay Cess under Clean Energy Cess' 2010 then as to whether he is also liable to pay interest & penalty over the Cess amount ? 12. At the outset, it is specified that as per Article 265 of the Constitution, no tax shall be levied or collected except by the authority of law. It may be noted that Entry 84, List 1 of the Constitution was amended by Section 17 of the Constitution (101st Amendment) Act, 2016. Prior to the 101st Amendment Act Entry 84, List I empowered Union to levy and collect duties of excise on tobacco and other goods manufactured in India. However, subsequent to the amendment to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess levied under sub-section (3)." 13. From bare perusal of the aforesaid section, it appears that Section 83(3) of Chapter VII of Finance Act, 2010 itself provides for "Levy", "Collection" and "Rates of Tax" at Tenth Schedule. As per Section 83, the levy of duty is on the production of Coal. The taxable event is production of coal and not its removal. Further, the Finance Act, 2010 itself provides for "Collection" and "Rates of Tax". Rules 4 & Rule 6 of Cess Rules specifies the procedure that the Cess is payable by 5th of the second month. The Rule does not specify that the Cess is to be paid at the rate applicable at the time of removal. Therefore, prima-facie it appears that respondent had the power to levy and collect Clean Energy Cess on the coal already produced and lying in stock as on 30.06.2017. To substantiate the aforesaid view, few aspects is to be seen. Section- 3 of the Central Excise Act, 1948 stipulates about levy of duty. In other words, levy is created by section-3 of the Central Excise Act itself and the collection of the same is regulated by the Rules. Thus, taxable event for Central Excise is manufacture or production of Goods and not the removal of Goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter of levy and collection of special excise duty cannot and does not mean that wherever the Central excise duty is payable, the special excise duty is also payable automatically. That is so as an ordinary rule. But insofar as the goods manufactured or produced prior to 1-3-1978 are concerned, the said rule cannot apply for the reason that there was no levy of special excise duty on such goods at the stage and at the time of their manufacture/production. The removal of goods is not the taxable event. Taxable event is the manufacture or production of goods. 13. In our opinion, the decision in Wallace Flour Mills [(1989) 4 SCC 592 : 1990 SCC (Tax) 10 : (1989) 44 ELT 598] does not lay down a contrary proposition - neither does it support the contention of Shri Vellapally. That was a case where the goods were excisable goods prior to 1-3-1987, though by virtue of an exemption notification, the rate of duty was nil. This does not mean that they were not excisable goods. They were excisable goods. Nil rate of duty is also a rate of duty. With effect from 1-3-1987, the said goods became excisable to duty at the rate of fifteen per cent ad valorem. It is in the above circumstances th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1987 and 1988, however, the rate of special excise duty was raised to ten per cent but then notifications were issued exempting the duty on all goods in toto. In other words, with effect from 1-3-1986, there was, in effect, no special excise duty until 28-2-1988. With effect from 1-3- 1988, the duty was again imposed @ 5%, while exempting certain essential commodities and other priority items from the said impost. We have held hereinabove that the goods manufactured/produced before 1-3-1978 but cleared on or after 1-3-1978 are not exigible to special excise duty. At the same time, we have also expressed the view that the goods manufactured/produced on or before 28-2- 1979 but cleared thereafter would be liable to pay the said duty at the rate and valuation in force as on 28-2-1979. In the light of the fact that the duty was continued from 1978 to 1986, indeed up to 28-2-1989 and also in view of the principle behind the presumption incorporated in Section 12-B of the Central Excise Act inserted by the Central Excises and Customs Law (Amendment) Act, 1991 - which is but a legislative recognition of a widely accepted presumption - we think it appropriate to direct that the assessees s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a & Ors, (1994) 4 SCC 734, Para 6-8; Watson v. Winch, [1916] 1 K.B. 688] is not applicable in the given facts and circumstances of the case. At this stage, it is also pertinent to mention here that the decision relied upon by the learned counsel for the petitioner rendered in the case of Kolhapur Canesugar Works Ltd. V. Union of India (2000) 2 SCC 536 has been declared per in curium by the Hon'ble Apex Court in the case of Fibre Bords Pvt. Ltd., Banglore versus CIT Banglore, reported in (2015)10 SCC 333. 16. Further, the contention of the Assessee that Section 18(2) of the Taxation Laws Amendment Act, 2017 does not specifically save the Cess Rules and Notification No. 2/2010-Clean Energy Cess, dated 22.06.2010 (i.e., the Notification borrowing the provisions of Central Excise Act, 1944 for recovery, interest etc.); therefore, the Cess Rules and the said Notification ceased to have any validity w.e.f. 01.07.2017 and thus, in absence of the Rules, there is no machinery provisions inter alia to demand, collect and recover Cess; is misconceived and not sustainable in view of the fact that levy is already created and rate is specified by section 83(3) of Finance Act, 2010 on production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Section 9 of the CGST Act whereas CGST Act has been enacted to levy tax as provided under Article 246-A of the Constitution. This is also true in respect of the cesses imposed on inter-State supplies of goods and services covered by Section 5 of the IGST Act, 2017. Therefore, on the same very transaction there cannot be two levies, one under CGST Act and another under impugned legislation as it would amount to double taxation as levy is on the same taxable event and same subject. Thus, there is an overlapping on law which is not permissible. The petitioner contends that goods and services tax being already imposed by three enactments of 2017 as noticed above imposition of States Compensation Cess is levied on the same taxing event and has overlapping effect. 62. The principle is well settled that two taxes/imposts which are separate and distinct imposts and on two different aspects of a transaction are permissible as "in law there is no overlapping". 63. A Constitution Bench of this Court in Federation of Hotel & Restaurant Assn. of India v. Union of India [Federation of Hotel & Restaurant Assn. of India v. Union of India, (1989) 3 SCC 634], held that a law with respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the tax is bad because of the vice of double taxation and is unreasonable because there are heavy prior levies was also voiced. Some of these contentions hardly merit consideration, but have been mentioned out of courtesy to counsel. The last one, for instance, deserves the least attention. There is nothing in Article 265 of the Constitution from which one can spin out the constitutional vice called double taxation. (Bad economics may be good law and vice versa). Dealing with a somewhat similar argument, the Bombay High Court gave short shrift to it in Western India Theatres [Cantonment Board, Poona v. Western India Theatres Ltd., 1953 SCC OnLine Bom 13 : AIR 1954 Bom 261]. Some undeserving contentions die hard, rather survive after death. The only epitaph we may inscribe is : Rest in peace and don't be reborn! If on the same subject-matter the legislature chooses to levy tax twice over there is no inherent invalidity in the fiscal adventure save where other prohibitions exist." 15. It is reiterated that liability to pay cess only accrues at the time of production and its payment is scheduled when the coal is removed in view of Rule 4 and 6 of Cess Rules since, as per sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were in the knowledge of the respondents; however, despite said facts being in the knowledge of the respondents, show cause notice was issued almost after two years from the date Clean Energy Cess was repealed. Thus, as aforesaid, since the instant case involves an interpretational issue, therefore in such circumstances, no penalty under Section 11AC can be levied as demand of Cess under the extended period of limitation is unsustainable. Further, as the allegation of suppression and wilful intent to evade tax is baseless and incorrect, penalty under Section 11AC(1)(c) of the Central Excise Act, 1944 cannot be imposed. Reference in this regard may be made to the judgment rendered in the case of M/s. International Merchandising Company, LLC (Earlier known as International Merchandising Corporation) Vrs. Commissioner, Service Tax, New Delhi reported in 2022 (12) TMI 556 SC wherein the Hon'ble Apex Court has held in 24 & 25 as under:- "24. We are of the considered view that the Tribunal having come to the conclusion that the issue turned upon an interpretation of the provisions of Section 65(68) and Section 65(86b) of the Finance Act 1994, there was no warrant to allow the invocat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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