Assistant Commissioner of CGST and Central Excise, Chennai / Commissioner CGST and Central Excise, Chennai / Union of India / Central Board of Excise and Customs, New Delhi v. Sutherland Global Services Private Limited / Government of Tamil Nadu / The Chairman GSTN
[Citation -2020-LL-1016-56]

Citation 2020-LL-1016-56
Appellant Name Assistant Commissioner of CGST and Central Excise, Chennai / Commissioner CGST and Central Excise, Chennai / Union of India / Central Board of Excise and Customs, New Delhi
Respondent Name Sutherland Global Services Private Limited / Government of Tamil Nadu / The Chairman GSTN
Court HIGH COURT OF MADRAS
Relevant Act CGST
Date of Order 16/10/2020
Judgment View Judgment
Keyword Tags unutilized cenvat credit • retrospective operation • goods and services tax • excise duty liability • expenditure incurred • legislative intent • services rendered • sufficient cause • credit facility • works contract • modvat credit • compensation • non-resident • levy of tax • levy of fee • tax credit


Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 1 / 135 IN HIGH COURT OF JUDICATURE AT MADRAS RESERVED ON : 01.10.2020 PRONOUNCED ON : 16.10.2020 CORAM HON'BLE DR.JUSTICE VINEET KOTHARI AND HON'BLE MR.JUSTICE KRISHNAN RAMASAMY Writ Appeal No.53 of 2020 1. Assistant Commissioner of CGST and Central Excise Guindy Division, 3rd Floor EVR Periyar Maligai 690, Anna Salai, Nandanam Chennai 600 035. 2. Commissioner CGST and Central Excise MHU Complex, V Floor Anna Salai, Nandanam Chennai 600 035. 3. Union of India rep. by its Secretary Ministry of Finance Department of Revenue North Block New Delhi 110 001. 4. Central Board of Excise and Customs 815, Nehru Place, Market Road New Delhi 100 019. .. Appellants Vs. 1. Sutherland Global Services Private Limited 45-A, Velacherry Main Road http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 2 / 135 Vijayanagaram Chennai 600 042. 2. Government of Tamil Nadu rep. by its Secretary State Tax Department Fort St. George Chennai 600 009. 3. Chairman GSTN, East Wing, World Mark-1 4th Floor, Tower B, Aerocity Indira Gandhi International Airport New Delhi 110 037. .. Respondents ----- Appeal under Clause 15 of Letters Patent filed against order dated 05.09.2019 made in W.P.No.4773 of 2018 on file of this Court. ----- For Appellants/ Revenue : Ms.Aparna Nandakumar For Respondent-1 : Mr.Raghavan Ramabathran For M/s. Lakshmi Kumaran Associates For Respondents 2&3 : Mr.Mohammed Shafhiq Spl. Govt. Pleader ----- JUDGMENT Dr.Vineet Kothari,J interesting and important question which arises in present intra Court appeal from judgment of learned Single http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 3 / 135 Judge dated 05.09.2019 allowing writ petition of Assessee M/s. Sutherland Global Services Private Limited in W.P.No.4773 of 2018, is as to whether Assessee is entitled to utilise and set off accumulated unutilised amount of Education Cess (EC), Secondary and Higher Education Cess (SHEC) and Krishi Kalyan Cess (KKC), all jointly referred to as "Cess" against Output GST Tax Liability after 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 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 enforcement of GST Regime with effect from 01.07.2017 and during contemporary period of levy of Cess, they were allowed to be set off or adjusted under CENVAT Credit Rules against Output Cess Liability only and no cross utilisation of Cess was allowed to be set off against normal excise duty or customs duty payable by Assessee, even http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 4 / 135 though Cess imposed under Finance Act were collected in form of Duty or Tax, as case may be, by reading mutatis mutandis provisions of those parent enactments. 3. 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 collected from person on whom such liability is fixed to meet particular kind of expenditure incurred by Government and its collection and expenditure is dedicated to that particular object or purpose of imposition of Cess. While Tax is General Revenue, which can be spent by Government for general public purposes and Duty is imposed on manufacture in form of Excise Duty or Customs Duty on Imports, under those specified laws, which also go to General Revenue of State. Fees is yet another impost which has basis of quid pro quo at its back. 4. controversy involved in present case is about set off, adjustment or utilisation of Input Tax Credit of Cess paid at time of manufacture or import by Assessee, which provides Technical and Call Centre Services all over country, namely as to http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 5 / 135 whether such Cess in form of Education Cess, etc. can be adjusted against Output GST liability under provisions of CGST Act, 2017 (Central Goods and Service Tax Act, 2017). 5. learned Single Judge, by detailed discussion of statutory provisions and relevant case laws, has held in favour of Assessee that Assessee was entitled to adjust such unutilised CENVAT credit carried forward in its Electronic Ledger, which was so lying unutilised as on 30th June 2017, to be adjusted against Output GST Liability with effect from 01.07.2017 in terms of Section 140 of CGST Act, 2017. 6. However, for reasons to be discussed below, we have found ourselves unable to subscribe to same view as that of learned Single Judge and we find that there is considerable merit in present writ appeal filed by Revenue and it deserves to be allowed. 7. Before coming to reasons for our aforesaid conclusion, let us discuss relevant provisions of relevant enactments involved http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 6 / 135 in present matter to understand controversy in better manner. 8. Section 140 of CGST Act, 2017, which is most crucial for this case and which provides for transitional arrangement for Input Tax Credit is quoted below for ready reference: "Transitional arrangements for input tax credit. 140. (1) registered person, other than person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, amount of CENVAT credit 3[of eligible duties] carried forward in return relating to period ending with day immediately preceding appointed day, furnished by him under existing law in such manner as may be prescribed: Provided that registered person shall not be allowed to take credit in following circumstances, namely: (i) where said amount of credit is not admissible as input tax credit under this Act; or (ii) where he has not furnished all returns required under existing law for period of six months immediately preceding appointed date; or (iii) where said amount of credit relates to goods http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 7 / 135 manufactured and cleared under such exemption notifications as are notified by Government. _________________________________________________ 3. Inserted by CGST (Amdt.) Act, 2018 (31 of 2018), dt. 30.8.2018, w.r.e.f. 1-7-2017. ________________________________________________________________ (2) registered person, other than person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, credit of unavailed CENVAT credit in respect of capital goods, not carried forward in return, furnished under existing law by him, for period ending with day immediately preceding appointed day in such manner as may be prescribed: Provided that registered person shall not be allowed to take credit unless said credit was admissible as CENVAT credit under existing law and is also admissible as input tax credit under this Act. Explanation. For purposes of this sub-section, expression unavailed CENVAT credit means amount that remains after subtracting amount of CENVAT credit already availed in respect of capital goods by taxable person under existing law from aggregate amount of CENVAT credit to which said person was entitled in respect of said capital goods under existing law. (3) registered person, who was not liable to be http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 8 / 135 registered under existing law, or who was engaged in manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was availing of benefit of notification No. 26/2012 Service Tax, dated 20th June, 2012 or first stage dealer or second stage dealer or registered importer or depot of manufacturer, shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on appointed day subject to following conditions, namely: (i) such inputs or goods are used or intended to be used for making taxable supplies under this Act; (ii) said registered person is eligible for input tax credit on such inputs under this Act; (iii) said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under existing law in respect of such inputs; (iv) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding appointed day; and (v) supplier of services is not eligible for any abatement under this Act: Provided that where registered person, other than manufacturer or supplier of services, is not in possession of http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 9 / 135 invoice or any other documents evidencing payment of duty in respect of inputs, then, such registered person shall, subject to such conditions, limitations and safeguards as may be prescribed, including that said taxable person shall pass on benefit of such credit by way of reduced prices to recipient, be allowed to take credit at such rate and in such manner as may be prescribed. (4) registered person, who was engaged in manufacture of taxable as well as exempted goods under Central Excise Act, 1944 (1 of 1944) or provision of taxable as well as exempted services under Chapter V of 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) amount of CENVAT credit carried forward in return furnished under existing law by him in accordance with provisions of sub-section (1); and (b) 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 appointed day, relating to such exempted goods or services, in accordance with provisions of sub-section (3). (5) registered person shall be entitled to take, in his http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 10 / 135 electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after appointed day but duty or tax in respect of which has been paid by supplier under existing law, subject to condition that invoice or any other duty or tax paying document of same was recorded in books of account of such person within period of thirty days from appointed day: Provided that period of thirty days may, on sufficient cause being shown, be extended by Commissioner for further period not exceeding thirty days: Provided further that said registered person shall furnish statement, in such manner as may be prescribed, in respect of credit that has been taken under this sub-section. (6) registered person, who was either paying tax at fixed rate or paying fixed amount in lieu of tax payable under existing law shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on appointed day subject to following conditions, namely: (i) such inputs or goods are used or intended to be used for making taxable supplies under this Act; (ii) said registered person is not paying tax under section 10; http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 11 / 135 (iii) said registered person is eligible for input tax credit on such inputs under this Act; (iv) said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under existing law in respect of inputs; and (v) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding appointed day. (7) Notwithstanding anything to contrary contained in this Act, input tax credit on account of any services received prior to appointed day by Input Service Distributor shall be eligible for distribution as credit under this Act even if invoices relating to such services are received on or after appointed day. (8) Where registered person having centralised registration under existing law has obtained registration under this Act, such person shall be allowed to take, in his electronic credit ledger, credit of amount of CENVAT credit carried forward in return, furnished under existing law by him, in respect of period ending with day immediately preceding appointed day in such manner as may be prescribed: Provided that if registered person furnishes his return for period ending with day immediately http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 12 / 135 preceding appointed day within three months of appointed day, such credit shall be allowed subject to condition that said return is either original return or revised return where credit has been reduced from that claimed earlier: Provided further that registered person shall not be allowed to take credit unless said amount is admissible as input tax credit under this Act: Provided also that such credit may be transferred to any of registered persons having same Permanent Account Number for which centralised registration was obtained under existing law. (9) Where any CENVAT credit availed for input services provided under existing law has been reversed due to non-payment of consideration within period of three months, such credit can be reclaimed subject to condition that registered person has made payment of consideration for that supply of services within period of three months from appointed day. (10) amount of credit under sub-sections (3), (4) and (6) shall be calculated in such manner as may be prescribed. Explanation 1. For purposes of 1[sub-sections (1), (3), (4)] and (6), expression eligible duties means (i) additional duty of excise leviable under section http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 13 / 135 3 of Additional Duties of Excise (Goods of Special Importance) Act, 1957; (ii) additional duty leviable under sub-section (1) of section 3 of Customs Tariff Act, 1975; (iii) additional duty leviable under sub-section (5) of section 3 of Customs Tariff Act, 1975; (iv) [....] (Omitted ibid) (v) duty of excise specified in First Schedule to Central Excise Tariff Act, 1985 (5 of 1986); (vi) duty of excise specified in Second Schedule to Central Excise Tariff Act, 1985; and (vii) National Calamity Contingent Duty leviable under section 136 of Finance Act, 2001 (14 of 2001) in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on appointed day. _________________________________________________ 1. Substituted for "sub-sections (3), (4)" by CGST (Amdt.) Act, 2018 (31 of 2018), dt. 30.8.2018, w.r.e.f. 1-7-2017. _________________________________________________ Explanation 2. For purposes of 3[sub-sections (1) and (5), expression eligible duties and taxes means (i) additional duty of excise leviable under section 3 of Additional Duties of Excise (Goods of http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 14 / 135 Special Importance) Act, 1957; (ii) additional duty leviable under sub-section (1) of section 3 of Customs Tariff Act, 1975; (iii) additional duty leviable under sub-section (5) of section 3 of Customs Tariff Act, 1975; (iv) [...] (v) duty of excise specified in First Schedule to Central Excise Tariff Act, 1985; (vi) duty of excise specified in Second Schedule to Central Excise Tariff Act, 1985; (vii) National Calamity Contingent Duty leviable under section 136 of Finance Act, 2001; and (viii) service tax leviable under section 66B of Finance Act, 1994, in respect of inputs and input services received on or after appointed day. _________________________________________________ 3. Substituted for "sub-sections (5)", ibid _________________________________________________ 1 [Explanation 3 - For removal of doubts, it is hereby clarified that expression "eligible duties and taxes" excludes any cess which has not been specified in Explanation 1 or Explanation 2 and any cess which is collected as additional duty of customs under sub-section (1) of section 3 of Customs Tariff Act, 1975 (51 of 1975)]. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 15 / 135 _________________________________________________ 1. Inserted by CGST (Amdt.) Act, 2018 (31 of 2018), dt. 30.8.2018, w.r.e.f. 1.7.2017. _________________________________________________ 8. Rule 117 of CGST Rules, 2017, providing of furnishing of Form No.GST TRAN-1 in terms of Section 140 is also quoted below for ready reference: Rule 117. Tax or duty credit carried forward under any existing law or on goods held in stock on appointed day.- (1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of appointed day, submit declaration electronically in FORM GST TRAN-1, duly signed, on common portal specifying therein, separately, amount of input tax credit of eligible duties and taxes, as defined in Explanation 2 to section 140, to which he is entitled under provisions of said section: Provided that Commissioner may, on recommendations of Council, extend period of ninety days by further period not exceeding ninety days. Provided further that where inputs have been received from Export Oriented Unit or unit located in Electronic Hardware Technology Park, credit shall be allowed to extent as provided in sub-rule (7) of rule 3 of http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 16 / 135 CENVAT Credit Rules, 2004. (2) Every declaration under sub-rule (1) shall- (a) in case of claim under sub-section (2) of section140, specify separately following particulars in respect of every item of capital goods as on appointed day- (i) amount of tax or duty availed or utilized by way of input tax credit under each of existing laws till appointed day; and (ii) amount of tax or duty yet to be availed or utilized by way of input tax credit under each of existing laws till appointed day; (b) in case of claim under sub-section (3) or clause (b) of sub-section (4) or sub-section (6) or sub-section (8) of section 140, specify separately details of stock held on appointed day; (c) in case of claim under sub-section (5) of section 140, furnish following details, namely: (i) name of supplier, serial number and date of issue of invoice by supplier or any document on basis of which credit of input tax was admissible under existing law; (ii) description and value of goods or services; http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 17 / 135 (iii) quantity in case of goods and unit or unit quantity code thereof; (iv) amount of eligible taxes and duties or, as case may be, value added tax [or entry tax] charged by supplier in respect of goods or services; and (v) date on which receipt of goods or services is entered in books of account of recipient. (3) amount of credit specified in application in FORM GST TRAN-1 shall be credited to electronic credit ledger of applicant maintained in FORM GST PMT2 on common portal. (4) (a) (i) registered person who was not registered under existing law shall, in accordance with proviso to sub-section (3) of section 140, be allowed to avail of input tax credit on goods (on which duty of central excise or, as case may be, additional duties of customs under sub- section (1) of section 3 of Customs Tariff Act, 1975, is leviable) held in stock on appointed day in respect of which he is not in possession of any document evidencing payment of central excise duty. (ii) input tax credit referred to in sub-clause (i) shall be allowed at rate of sixty per cent. on such goods which attract central tax at rate of nine per cent. or more http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 18 / 135 and forty per cent. for other goods of central tax applicable on supply of such goods after appointed date and shall be credited after central tax payable on such supply has been paid: Provided that where integrated tax is paid on such goods, amount of credit shall be allowed at rate of thirty per cent. and twenty per cent. respectively of said tax; (iii) scheme shall be available for six tax periods from appointed date. (b) credit of central tax shall be availed subject to satisfying following conditions, namely:- (i) such goods were not unconditionally exempt from whole of duty of excise specified in First Schedule to Central Excise Tariff Act, 1985 or were not nil rated in said Schedule; (ii) document for procurement of such goods is available with registered person; (iii) registered person availing of this scheme and having furnished details of stock held by him in accordance with provisions of clause (b) of sub-rule (2), submits statement in FORM GST TRAN 2by 31st March 2018, or within such period as extended by Commissioner, on http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 19 / 135 recommendations of Council, for each of six tax periods during which scheme is in operation indicating therein, details of supplies of such goods effected during tax period; (iv) amount of credit allowed shall be credited to electronic credit ledger of applicant maintained in FORM GST PMT-2 on common portal; and (v) stock of goods on which credit is availed is so stored that it can be easily identified by registered person." 9. Ministry of Finance, Department of Revenue (Central Board of Indirect Taxes and Customs), New Delhi, issued Circular No.87/06/2019-GST on 02nd January 2019 addressed to all Chief Commissioners and other Authorities clarifying said provisions of CGST Amendment Act, 2018. said Circular is also found to be relevant and therefore, it is quoted in extenso below. "Circular No. 87/06/2019-GST Dated 2nd January, 2019 F. No. 267/80/2018-CX.8 Government of India http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 20 / 135 Ministry of Finance Department of Revenue (Central Board of Indirect Taxes and Customs) New Delhi To Principal Chief Commissioners/ Chief Commissioners/Principal Commissioners/ Commissioner of Central Tax (All) Principal Director Generals/ Director Generals (All) Sub: Central Goods and Services Tax (Amendment) Act, 2018- Clarification regarding section 140(1) of CGST Act, 2017-reg. Attention is invited to sub-section (a) of section 28 of CGST (Amendment) Act, 2018 (No. 31 of 2018) which provides that section 140(1) of CGST Act, 2017 be amended with retrospective effect to allow transition of CENVAT credit under existing law viz. Central Excise and Service Tax law, only in respect of eligible duties . In this regard, doubts have been expressed as to whether expression eligible duties would include CENVAT credit of Service Tax within its scope or not. 2. Therefore, in exercise of powers conferred under http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 21 / 135 section 168 of Central Goods and Services Act (hereinafter referred to as Act ), for purposes of uniformity in implementation of Act, Central Board of Indirect Taxes and Customs hereby directs following: 3.1 CENVAT credit of service tax paid under section 66B of Finance Act, 1994 was available as transitional credit under section 140(1) of CGST Act and that legal position has not changed due to amendment of section 140(1) on account of following reasons: i) amendment in provisions of section 140(1) and explanations to section 140 need to be read harmoniously such that neither any provision of amendment becomes otiose nor does legislative intent of amendment get defeated. ii) intention behind amendment of section 140(1) to include expression "eligible duties has been indicated in Rationale/ Remarks column (at Sl. No. 37) of draft proposals for amending GST law which was uploaded in public domain for comments. It is clear that transition of credit of taxes paid under section 66B of Finance Act, 1994 was never intended to be disallowed under section 140(1) and therefore no such remark was present in document. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 22 / 135 iii) Under tax statutes, word duties" is used interchangeably with word taxes and in present context, two words should not be read in disharmonious manner. 3.2 Thus, expression "eligible duties in section 140(1) which are allowed to be transitioned would cover within its fold 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 expression eligible duties and taxes has not been used elsewhere in Act. 3.3 expression eligible duties under section 140(1) does not in any way refer to condition regarding goods in stock as referred to in Explanation 1 to section 140 or to condition regarding inputs and input services in transit, as referred to in Explanation 2 to section 140. 4. Further, it has been decided not to notify clause (i) of sub-section (b) of section 28 and clause (i) of sub- section (c) of section 28 of CGST (Amendment) Act, 2018 which link Explanation 1 and Explanation 2 of section 140 to section 140(1). This would ensure that credit allowed to be transitioned under section 140(1) is not linked to credit of goods in stock, as provided under Explanation 1, and credit of goods and services in transit, as provided under Explanation 2. However, duties and taxes for which http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 23 / 135 transition is allowed shall be governed by para 3.2 above. 5. No transition of credit of cesses, including cess which is collected as additional duty of customs under sub- section (1) of section 3 of Customs Tariff Act, 1975, would be allowed in terms of Explanation 3 to section 140, inserted vide sub-section (d) of section 28 of CGST Amendment Act, 2018 which shall become effective from date same is notified giving it retrospective effect. 6. Trade may be suitably informed and difficulty, if any, in implementation of this circular may be brought to notice of Board. Yours faithfully, (KUMAR VIVEK) OSD (CX.3/8)" Levies of different Cess like Education Cess, Secondary and Higher Education Cess, etc. 10. Finance Act No.2 of 2004 introduced levy of Education Cess in Sections 91 to 94 of Finance Act, 2004, at rate of 2% which shall be charged as duty of Excise as Education Cess on excisable goods to fulfil commitment of Government to provide and finance universalised quality basic education. said provisions of Sections 91 to 95 in Chapter VI of http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 24 / 135 Finance Act, 2004 are also quoted below for ready reference. "91. Education Cess. - (1) Without prejudice to provisions of sub-section (11) of section 2, there shall be levied and collected, in accordance with provisions of this Chapter as surcharge for purposes of Union, cess to be called Education Cess, to fulfil commitment of Government to provide and finance universalised quality basic education. (2) Central Government may, after due appropriation made by Parliament by law in this behalf, utilise, such sums of money of Education Cess levied under sub-section (11) of section 2 and this Chapter for purposes specified in sub-section (1), as it may consider necessary. 92. Definition. words and expressions used in this Chapter and defined in Central Excise Act, 1944 (1 of 1944), Customs Act, 1962 (52 of 1962) or Chapter V of Finance Act, 1994 (32 of 1994), shall have meanings respectively assigned to them in those Acts or Chapter, as case may be. 93. Education Cess on excisable goods. - (1) Education Cess levied under section 81, in case of goods specified in First Schedule to Central Excise Tariff Act, 1985 (5 of 1986), being goods manufactured or produced, shall be duty of excise (in this section referred to http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 25 / 135 as Education Cess on excisable goods), at rate of two per cent, calculated on 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 Central Government in Ministry of Finance (Department of Revenue), under provisions of Central Excise Act, 1944 (1 of 1944) or under any other law for time being in force. (2) Education Cess on excisable goods shall be in addition to any other duties of excise chargeable on such goods, under Central Excise Act, 1944 (1 of 1944) or any other law for time being in force. (3) provisions of Central Excise Act, 1944 (1 of 1944) and rules made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty shall, as far as may be, apply in relation to levy and collection of Education Cess on excisable goods as they apply in relation to levy and collection of duties of excise on such goods under Central Excise Act, 1944 or rules, as case may be. 94. Education Cess on imported goods. - (1) Education Cess levied under section 81, in case of goods specified in First Schedule to Customs Tariff Act, 1975 (51 of 1975), being goods imported into India, shall be duty of customs (in this section referred to as Education http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 26 / 135 Cess on imported goods), at rate of two per cent calculated on aggregate of duties of customs which are levied and collected by Central Government in Ministry of Finance (Department of Revenue), under section 12 of Customs Act, 1962 (52 of 1962) and any sum chargeable on such goods under any other law for time being in force, as addition to, and in same manner as, duty of customs, but not including (a) safeguard duty referred to in sections 8B and 8C of Customs Tariff Act, 1975 (51 of 1975); (b) countervailing duty referred to in section 9 of Customs Tariff Act, 1975 (51 of 1975); (c) anti-dumping duty referred to in section 9A of Customs Tariff Act, 1975 (51 of 1975); and (d) Education Cess on imported goods. (2) Education Cess on imported goods shall be in addition to any other duties of customs chargeable on such goods, under Customs Act, 1962 (52 of 1962) or any other law for time being in force. (3) provisions of Customs Act, 1962 (52 of 1962) and rules and regulations made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty shall, as far as may be, apply in relation to levy and collection of Education Cess on imported goods as they apply in relation to levy http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 27 / 135 and collection of duties of customs on such goods under Customs Act, 1962 or rules or regulations, as case may be. 95. Education Cess on taxable services. - (1) Education Cess levied under section 81, in case of all services which are taxable services, shall be tax (in this section referred to as Education Cess on taxable services) at rate of two per cent, calculated on tax which is levied and collected under section 66 of Finance Act, 1994 (32 of 1994). (2) Education Cess on taxable services shall be in addition to tax chargeable on such taxable services, under Chapter V of Finance Act, 1994 (32 of 1994). (3) provisions of Chapter V of Finance Act, 1994 (32 of 1994) and 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 levy and collection of Education Cess on taxable services, as they apply in relation to levy and collection of tax on such taxable services under Chapter V of Finance Act, 1994 or rules, as case may be. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 28 / 135 SECOND SCHEDULE [See section 88(1)] Provision of Amendment Date of effect of CENVAT Credit amendment Rules, 2002 to be amended (1) (2) (3) Explanation to In CENVAT Credit 1st March, 2003 clause (b) of sub- Rules, 2002, in rule 3, in rule (6) of rule 3. sub-rule (6), in clause (b), for Explanation, following Explanation shall be substituted, namely:- "Explanation. - For removal of doubts, it is hereby declared that credit of additional duty of excise leviable under section 3 of Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and paid on or after 1st day of April, 2000, may be utilised towards payment of duty of excise leviable under First Schedule or Second Schedule to Central Excise Tariff Act, 1985 (5 of 1986);" http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 29 / 135 Introduction of Secondary and Higher Education Cess 11. Next is Secondary and Higher Education Cess introduced by Finance Act, 2007, from Section 136 onwards. said Cess was levied as surcharge to fulfil commitment of Government to provide Finance and Secondary and Higher Education. This Cess was also liable to be collected in addition to any other duties of excise chargeable on such goods under provisions of Central Excise Act, 1944 and also Education Cess imposed by Section 93 of Finance (No.2) Act, 2004 quoted above. Similar SHEC was also imposed by Section 139 of same Finance Act, 2007, at rate of 1% to be collected in addition to duty of customs on imported goods as well as on service tax leviable under provisions of 66 of Finance Act, 1994. provisions of said SHEC is not again quoted as they are akin to aforesaid provisions of levy of Education Cess. 12. Similarly, Central Government imposed Krishi Kalyan Cess by Section 161 of Finance Act, 2016, with effect from 1st June 2016 at rate of 0.5% of Service Tax payable on taxable http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 30 / 135 services, for purpose of financing and promoting initiatives to improve agriculture or any other purpose relating thereto. said Krishi Kalyan Cess was repealed with effect from 01.07.2017 only by Taxation Laws (Amendment) Act, 2017. 13. levy of Education Cess and Secondary and Higher Education Cess was however dropped and deleted by Finance Act, 2015 by Section 153, of which, Section 95 of Finance Act 2004, Education Cess was omitted and by Section 159, Section 140 of Finance Act, 2007 was also omitted. Krishi Kalyan Cess was however abolished only with effect from 01.07.2017 vide Taxation Laws (Amendment) Act, 2017. But, there was no claim of CENVAT Credit with regard to Krishi Kalyan Cess and reason which apply to Education Cess and Secondary and Higher Education Cess will equally apply to Krishi Kalyan Cess also for purpose of Section 140 of CGST Act. relevant provisions of Central Excise Act and CENVAT Rules for availment and utilisation of CENVAT Credit 14. Section 37 of Central Excise Act, 1944, provides power of Central Government to make Rules and various Clauses http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 31 / 135 of Section 37 empowered Central Government to frame Rules with regard to various aspects of Central Excise Law and our attention was drawn towards Clause (xxviii) thereof, which provides for Rules to be framed in regard to lapsing of credit of duty lying unutilised with manufacturer of specificied excisable goods on 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 CENVAT Credit Rules, 2004, provides that manufacturer or purchaser of final products or provider of output service shall be allowed to take credit (hereinafter referred to as CENVAT Credit) of specified duties in that Rule 3, which included Education Cess and Secondary and Higher Education Cess in question. Sub-rule (7) of Rule 3 of CENVAT Credit Rules, 2004, specifically provided that CENVAT Credit in respect of Education Cess and Secondary and Higher Education Cess shall be utilised only towards payment of Education Cess leviable on taxable services only and not against normal excise duty. Those CENVAT Rules, 2004 clearly http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 32 / 135 restricted utilisation of Education Cess and Higher and Secondary Education Cess on output tax on goods and services and not against normal excise duty or service tax liability. It was not disputed before us that cross utilisation of CENVAT Credit in form of Education Cess and Secondary and Higher Education Cess against normal service tax and excise duty liability was not allowed. 16. controversy, however, arose because Assessee claimed in present case that unutilised part of Education Cess and Secondary and Higher Education Cess lying to credit of Assessee in Electronic Ledger continued even after levies were omitted by Finance Act, 2015, as aforesaid, up to 30th June 2017, when switch over was made to GST Regime with effect from 01.07.2017 and therefore, vested right came to accrue with Assessee to utilise such unutilised CENVAT Credit of Education Cess and Secondary and Higher Education Cess against output GST liability with effect from 01.07.2017. Since Revenue Authority under GST negatived said claim and asked Assessee to reverse CENVAT Credit in form of Education Cess and Secondary and Higher Education Cess, Assessee approached this Court by way of http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 33 / 135 writ petition which came to be allowed by learned Single Judge by order impugned before us now. 17. Before coming to our reasons for conclusion that Assessee is not so entitled to carry forward unutilised Education Cess and Secondary and Higher Education Cess as CENVAT Credit to be utilised against output GST liability under provisions of CGST Act, in terms of Section 140 thereof, let us note rival contentions raised before us. Contentions raised on behalf of Revenue/Appellant 18. Ms.Aparna Nandakumar, learned counsel for appellant/ Revenue submitted that with levy of Cess having been dropped in year 2015 by Finance Act, 2015, unutilised amount of Education Cess and Secondary and Higher Education Cess which could not be set off by Assessee during contemporary period prior to 30th June 2017, cannot be allowed to be carried forward under transitory provisions of Section 140 of CGST Act, because it became dead claim of Assessee and since levy of Cess was not continued after 2015 nor such levy was subsumed in listed 16 http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 34 / 135 taxes which were subsumed under GST law, credit in respect of such Cess could not be claimed against Output GST liability. She emphasised that since Cess was collected for specific and dedicated purpose by Central Government and such levies imposed by Finance Act, 2004 and 2007 respectively and purpose of giving input credit in respect of same against output Cess liability was only to remove cascading effect and which is bedrock of such Input Tax Credits in indirect taxation system was not available, as Output Cess Liability ceased, therefore, untilised portion of such CENVAT credit in form of Education Cess and Secondary and Higher Education Cess became dead claim after such levies were dropped in year 2015 and unlike unutilised portion of CENVAT credit in form of specified additional excise duty, customs duty, National Calamity Contingent Duty on inputs which were transitioned as per Section 140 of CGST Act for period from 01.07.2017 also, such unutilised Cess could not stand at parity with unutilised Input credit of specified excise duty and therefore, claim of Assessee in this regard was misconceived and learned Single Judge has erred in allowing same. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 35 / 135 19. learned counsel for appellant/Revenue relied upon several case laws to support her contention as was done before learned Single Judge also, which will be discussed by us hereafter. 20. written submissions filed by appellant/Revenue was also taken on record and same is re-produced below, which have been considered by us. I. HISTORICAL BACKGROUND OF INTRODUCTION AND ABOLITION OF CESSES:-(EC,SHEC and KKC) a. Education Cess (hereinafter referred as EC) was introduced vide Finance Act 23 of 2004. Section 91of Chapter VI of Finance Act 23 of 2004 specifically provided that there shall be levied and collected in accordance with provisions of this chapter as surcharge for purpose of Union, cess to be called Education Cess to fulfil commitment of Government to provide and finance universalised quality basic education . Subsection (2) of Section 91 of Finance Act 23 of 2004 specifically provided that sum of money collected as Education Cess would be utilised for purpose specified in sub section (1) after due appropriation made by Parliament by law. b. Similarly Secondary and Higher Education Cess(hereinafter referred as SHE Cess) was introduced vide Finance Act 2007. Section 136 of chapter VI of Finance Act 2007, provided that Secondary and Higher Education Cess would be levied and collected as surcharge and would be utilised to provide for purpose of Secondary and Higher Education after due appropriation made by Parliament by law in this behalf. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 36 / 135 c. Similarly Finance Act 2016 provided for levy and collection of Krishi Kalyan Cess (hereinafter referred as KKC) to meet needs of agriculturists and farmers. Thus three cesses were introduced for specific purposes and same was collected by Central Government and utilised only for those identified specified purposes. d. first proviso to Rule 3(7)(b) of CENVAT Credit Rules 2004 provided that credit of Education Cess on excisable goods and on taxable services could be utilised either for payment of Education Cess on excisable goods or for payment of Education Cess on taxable services. e. second proviso to Rule 3(7)(b) of CENVAT Credit Rules provided that 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 payment of Secondary and Higher Education Cess on taxable services. f. Similarly Rule 3(7)(d) provided that CENVAT credit pertaining to Krishi Kalyan Cess on taxable services levied under Section 161 of Finance Act 2016 shall be utilised only towards payment of Krishi Kalyan Cess on taxable services. g. Thus from inception of Education Cess, Secondaryand Higher Education and Krishi Kalyan Cess intention of statute was to allow credit utilisation of CENVATCredit pertaining to these cesses only as against respective cesses levied on excisable goods or output taxable services. This position continued till 2015. h. Thus cross utilisation of Education Cess and Secondary and Higher Education Cess as against output element of excise duty and service tax was never allowed. i. Education Cess and Secondary Higher Education Cess http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 37 / 135 levied on excise duty and taxable services were abolished from year 2015 by omission of Section 95 of Finance Act 2004 and section 140 of Finance Act 2007 vide Section 153 and 159 respectively of Finance Act 2015. j. Consequently Notification 14 of 2015 Central Excise and Notification 15 of 2015 Central Excise and Notification 14 of 2015 ST and Notification 15 of 2015 ST exempted all goods and services from levy of Education Cess and Secondary Higher Education Cess 01.03.2015 and 01.06.2015 respectively. k. Thus after these two cut of dates, levy of education cess and levy of secondary higher education cess was completely wiped away from statute book. In other words, levy of education cess on excisable goods and taxable services remained in statute book from 2004 to 2015. Likewise, levy of SHE Cess remained in Statute book from 2007 to 2015. l. While so vide Notification No. 12 of 2015- CE-NT dated 30.04.2015 and Notification 22of 2015- CE-NT dated 29.10.2015 six provisos were added to Rule 3(7)(b) of CENVATCredit Rules after first two provisos. According to newly added provisos following position emerged :- i. credit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in factory of manufacture of final products on or after 01.03.2015 could be utilised for payment of central excise duty. ii. 50% balance credit of Education Cess and Secondary and Higher Education Cess paid on capital goods received in factory of manufacture of final products in financial year 2014-15 can be utilised for payment of central excise duty. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 38 / 135 iii. CENVATCredit pertaining to Education Cess and Secondary and Higher Education Cess paid on input services received by manufacture of final products on or after 01.03.2015 could be utilised for payment of central excise duty. iv. CENVATCredit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in premises of provider of output service on or after 1st day of June, 2015 can be utilized for payment of service tax on any output service. v. 50% balance credit of Education Cess and Secondary and Higher Education Cess paid on capital goods received in premises of provider of output service in 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 invoice, bill, challan or Service Tax Certificate for Transportation of Goods by Rail is received by provider of output service on or after 1st day of June, 2015 can be utilized for payment of service tax on any output service. m. newly added provisos was Special Purpose Vehicle for limited period to give 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 Hon ble Delhi High Court in 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 Hon ble Delhi High Court upheld http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 39 / 135 Notifications and held that CENVATCredit of Education and Secondary Higher Education Cess which has been availed till cut of date had lapsed to Government and could not be cross utilised and could not be allowed to be cross utilised as against excise duty and service tax. p. appellant submits that in light of statutory provisions and legal position enumerated above and in light of decision of Hon ble Delhi Court, appellant herein submits synopsis of oral arguments made before this Hon ble Court on 30.09.2020 and 01.10.2020. II. SYNOPSIS OF LEGAL PROPOSTIONS: LEGAL PROPOSITION I :- Dead Claim a. It is submitted that CENVAT Credit of Education Cess and Secondary and Higher Education Cess which had been availed prior to cut of date namely 01.03.105 and 01.06.2015 had become dead claim and cannot be revived after time gap of two years. levy having been withdrawn in year 2015, availed credit could neither be utilised post 2015 nor can it be transitioned into Goods and Service Tax Act, 2017 regime(hereinafter referred as GST Enactment). In other words enactment of Central Goods and Service Tax Act, 2017 (hereinafter referred as CGST Act) with effect from 01.07.2017 cannot be treated as revival or extension of limitation when claim itself becomes dead claim. appellant relies on observations of Hon ble Supreme Court in case of UOI v. Uttam Steels Ltd. (2015) 13 STC 209. LEGAL PROPOSITION II :- Cess is Not Eligible Duties : a. Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess may have colour of duty or tax at first blushper se, but is not tax or excise duty per se. Contrary http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 40 / 135 to levy of tax and duty which are compulsory exactions of money from public for public purposes enforceable by law and is not payment for services rendered, cess is levied with quid pro quo element for services rendered. b. appellants/department places reliance on Judgment of Hon ble Supreme Court in Commissioner, Hindu Religious Endowments, Madras v. Sri LakshmindraThirthaSwamiar of Sri Shirur Mutt MANU/SC/0136/1954 : AIR 1954 SC 282Matthews v. Chicory Marketing Board (1938) 60 C.L.R. 263Dewan Chand Builders & Contractors v. UOI [2012 1 SCC 101], Tamil Nadu Minerals Limited Vs. Joint Commissioner of Income Tax, Company Range-III [ (2019)310C TR(Mad)746, [2019]414ITR196(Mad)]. c. It is submitted that as held by Hon ble Apex Court, if Statement of Objects and Reasons spells out essential purpose which enactment seeks to achieve or if AmendingAct introducing levy of cess spells out specific purpose in which levy has been introduced, then subject levy has to be construed only as fee and not tax. d. Section 91 of Finance Act, 2004 which introduced levy of Education Cess specifically provides that levy of Education Cess is provide funds for basic education. Similarly Section 136 of Finance(Amending Act) 2007 specified purpose viz to provide funds and infrastructure for medium and higher education. e. It is submitted that other requirement that fund is set apart and appropriated specifically for performance of specified purpose and is not merged with benefit of general public is also there in present case. f. contention of respondentassessee by placing http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 41 / 135 reliance on decision in Hingir Rampur Coal Company Ltd. v. State of Orissa MANU/SC/0037/1960 : 1961 (2) SCR 537 that Education Cess, Secondary and Higher Education Cess were credited into Consolidated Fund of India(herein after referred as CFI) and therefore it is collected only tax is wholly untenable for following reasons:- i. Although initially collections of Education Cess, Secondary and Higher Education Cess were credited into Consolidated Fund of India,a specific account called Prarambhik Shiksha Kosh (PSK) was created in year 2005-06 after obtaining Parliamentary authorization and these funds collected with respect to education cess were transferred to Prarambhik Shiksha Kosh (PSK).Thus even though initially funds pertaining to Education Cess were credited into Consolidated Fund of India, it has been later transferred to Prarambhik Shiksha Kosh (PSK) specifically created for purpose of expending Education Cess funds. This fact has been admitted by respondentassessee [page 78 of additional paper book filed by respondentassessee report of CAG]. ii. respondentassessee herein submits that even though Secondary and Higher Education Cess was introduced in year 2007, entire collection pertaining to Secondary and Higher Education Cess has been credited into Consolidated Fund of India and no separate fund has been created. respondentassessee relies on CAG report for year 2014-15 and 16-17. In this connection appellantdepartment submits as follows:- Even though collection of SHECess was credited into Consolidated Fund of India it was not expended or spent for general public purpose and was awaiting proper Parliamentary approval for creation of separate fund. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 42 / 135 On 16.08.2017, Union Cabinet accorded approval for creation of non-lapsable separate account called as Madhyamik &Uchhatar Shiksha Kosh (MUSK) into which all proceeds of Secondary and Higher Education Cess would be credited. In this connection appellant herein files type set no 4 containing305th report of Department-Related Parliamentary Standing Committee on Human Resource Development and press release by Press Information Bureaudated 16.08.2017. Para 2.8 of standing committee report gives details of this specific fund called Madhyamik &Uchhatar Shiksha Kosh (MUSK). Sub para (a) of para 2.8 states that proceeds of Secondary and Higher Education Cess will be credited into Madhyamik &Uchhatar Shiksha Kosh (MUSK). Further sub para (c) of para 2.8 categorically states that cess would be utilised in ongoing schemes of Secondary and Higher Education. Sub para (e) of para 2.8 specifies that Madhyamik &Uchhatar Shiksha Kosh (MUSK) would be maintained as reserve fund in non interest bearing section of Public Accounts of India. Para 2.9 mentions actual fund allocations to be provided under Madhyamik &Uchhatar Shiksha Kosh (MUSK). Similarly para 2.10 of Standing Committee report gives elaborate details about Prarambhik Shiksha Kosh (PSK) that was credited in year 2006. It also states very specifically that Prarambhik Shiksha Kosh (PSK) fund is maintained by Ministry of Human Resource Development and that transfer to http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 43 / 135 Prarambhik Shiksha Kosh (PSK) account are made by Ministry of Finance after approval by Parliament. Para 2.11 has also given year wise chart on allocation and utilisation of education cess collected. It is further submitted that this point could not be brought to notice of this Hon ble Court during oral arguments as respondentassessee herein filed additional type set 2 containing CAG report on final day of arguments. Thus appellants herein submits and crave leave before this Hon ble Court to make this submission on Madhyamik &Uchhatar Shiksha Kosh (MUSK) and Standing Committee report as response to additional type set 2 and response to submissions of respondent herein regarding Consolidated Fund of India. LEGAL PROPOSITION III :-Cesses cannot take colour of basic levy a. It is submitted that term duty does not include additional duties such as Education cess, Secondary and Higher Education Cess NCCD etc. thus unless there is specific notification or provision which specifically provides for any benefit with regard to additional duty, benefit that is applicable to basic duty or tax cannot be extended to additional duty. In this connection appellant places reliance on decision of larger bench of Hon ble Apex Court in UOI v Modi Rubber (1986 25 ELT 849 SC). b. Following this decision latest decision of Larger Bench of Hon ble Supreme Court in Unicorn Industries V UOI(2019 370 ELT 3) as held that education cess, secondary and higher Education cess, NCCD etc which are all additional levy are independent in nature and do not take colour of basic levy. larger bench of Hon ble Supreme Court has held in two Division Bench judgments of Hon ble Supreme Court in SRD Nutrients Private Limited v. Commissioner of Central Excise, Guwahati, http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 44 / 135 MANU/SC/1407/2017 : (2018) 1 SCC 105 and decision of this Court in Bajaj Auto Limited v. Union of India and Ors., MANU/SC/0417/2019, decided on 27.3.2019 as per incuriam as two Division Bench judgments had not followed law laid down by larger bench of Hon ble Supreme Court in UOI v. Modi Rubber. c. It is submitted that although decisions of Larger Bench of Hon ble Supreme Court arose in context of exemption to basic central excise, customs duty and whether benefit of exemption could be extended to benefit of Education Cess, Secondary and Higher Education Cess, NCCD etc. , law laid down by Hon ble Supreme Court can be extended to present case of transition of CENVAT Credit of eligible duties. Thus appellant submits, that term eligible duty occurring in Section 140(1) of CGST Act, 2017 cannot include 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 Section. d. It is submitted therefore that argument of respondent herein that extension of applicability of Explanation 1 to Section 140(1) has not been brought into effect and hence term eligible duties should be allowed to include cesses, is wholly untenable. e. Explanation (3) to Section 140 also makes it categorical that intention of Legislature was never to transitioned CENVAT Credit pertaining to cesses. LEGAL PROPOSITION IV :- Cesses Cannot be Cross Utilised as against duties or taxes: a. respondentassessee herein has placed reliance on decision of Hon ble Supreme Court inEicher Motors Ltd. v. UOI [ 1999 (106) ELT 3 (SC). contention of respondentassessee herein is that CENVATCredit pertaining to Education Cess, Secondary and Higher http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 45 / 135 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 was not permitted. Thus, their contention is that even though CENVATCredit of Education Cess, Secondary and Higher Education Cess availed and available in books of accounts and were lying unutilised due to barring provisions, they could be transitioned into GST regime as it was indefeasible right. b. It is submitted that there is difference between availment of credit and utilisation of credit. appellant also admits legal position propounded by respondent that even though there is statutory time limit fixed for availment of credit there is no time limit for utilisation of credit. However, utilisation of availed credit will remain indefeasible only when facility for working it out or levy with regard to output element remains intact. In Eicher Motors Ltd. v. UOI [ 1999 (106) ELT 3 (SC) provision which provided lapse of MODVAT Credit was challenged. However in facts before Hon ble Supreme Court, levy or output element was still intact and in such circumstances Hon ble Supreme Court observed in para 6 of Judgment, that right accrued to assessee on date they paid tax on raw material or inputs would continue until facility available thereto gets worked out or until those goods existed. Thus Hon ble Supreme Court presupposed existence of facility for working out earned credit and existence of output element for duty for utilisation of credit. In present case however, levy of Education Cess, Secondary and Higher Education Cess had been taken away in year 2015 itself. In other words, facility for working out earned credit has been taken away and hence possibility of continuing right has also ceased. Hon ble Delhi High Court in case of Cellular Operators Association of India v UOI[Reported in 2018 (14) GSTL 522, (2018) 51 GSTR http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 46 / 135 338 (Del), MANU/DE/0710/2018] has distinguished Hon ble Supreme Court Eicher Motors Ltd. v. UOI [ 1999 (106) ELT 3 (SC) of Hon ble Supreme Court. LEGAL PROPOSITION V:- Doctrine of Purposive interpretation: a. Section 140 which deals with transition of CENVATCredit of eligible duties and taxes envisages 9 different situations of which situation postulated in sub section (1) and sub section (8) are almost similar in effect. specific similarity in two subsectionsare that in both subsections provisions speak about regular tax payers who have been in CENVAT chain all along and who have excess credit in last return of erstwhile law preceding date of inception of GST viz 01.07.2017. difference between two subsectionsis that while subsection (1) takes in its hold, manufacturers and service providers with single registration,subsection (8) deals with centralised registration that was one of norms in service tax registration. First provision to subsection(8) of Section 140 further provides leverage of 3 months to such assessee to transitioned credit even postinception of GST. other subsection deals with other specified circumstances, exempt goods or services in earlier regime. b. However, commonality in all subsections except subsection (8) phrase used is either CENVAT Credit of 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 CGST Act, 2017. Thus, contention of respondent is that they fall under section 140(8) as they were having centralised registration in earlier regime and that as subsection does not contained phrase of eligible duties or of eligible duties and taxes . CENVAT credit pertaining to Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess can be transitioned http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 47 / 135 into GST regime. This contention is refuted by appellant . c. Regarding contention that section 140(8) does not contain phrase of eligible duties or of eligible duties and taxes . appellants submits that harmonious construction of section 140 of CGST Act, 2017 as whole indicates that draftsman intended transition of only eligible duties and taxes of earlier regime that has been subsumed prior to inception of GST. d. Thus as on 01.07.2017 Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess had been abolished vide Taxation Law Amendment Act, 2017 04.05.2017, along with other levies. Hence above three cesses were not subsumed along with 14 taxes and duties on date of inception of GSTEnactment and hence transition of same is not possible.Thus, intention of draftsman is discernible that CENVATCredit of cesses was never intended to be transitioned. e. respondent contention that absence of words of eligible duties in Section 140(8) would mean that even CENVAT Credit pertaining to cessescould be transitioned, is wholly untenable. It is submitted that as all other subsection using phrase CENVATCredit of eligible duties or CENVAT credit of eligible duties and taxes ,the absence of phrase eligible duties in subsection 8 is nothing but unintentional oversight by draftsman and not intentional. f. On harmonious construction of entire section 140 which deals withtransitioning of only subsumed duties and taxes,a literal interpretation by respondent to make subsection (8) as standalone provisionwill only lead to absurdity. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 48 / 135 g. To support this contention, appellants herein relies on decision of Hon ble Supreme Court in Dilip S. Dhanukar Vs. Kotak Mahindra Co. Ltd. and Ors.[MANU/SC/8289/2007] wherein Doctrine of Purposive Interpretation has been explained with reference to Bennion s Statutory Interpretation. According to Bennion s Statutory Interpretation relied by Hon ble Supreme Court,three condition are necessary to employ doctrine of purposive interpretation in place of literal interpretation :- 1. Whether reading of whole statuteor provision would determine precisely what mischief was, purpose of act of was to remedy. 2. That draftsman and Parliament had by inadvertent overlooked and omitted to deal with eventuality that required to be dealt with, if purpose of Act is to be achieved. 3. It was possible to state with certainty what would be additional word that would have been inserted by draftsman and approved by Parliament before bill passed into law. h. Applying doctrine of purposive interpretation to subsection(8) of section 140, appellant submits that three-condition laid down above are satisfied. 1. purpose of section 140 was to transition only subsumed duty and taxes which were in existence as on 01.07.2017 and it was never intention to transition cesses which have been abolished much prior to 01.07.2017. 2. draftsmen by inadvertencehad overlooked phrase of eligible duties and omission is not intentional. 3. It can be said with certainty that additional words which would have been inserted by draftsman had attention been drawn much earlier would be of eligible duties . http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 49 / 135 LEGAL PROPOSITION VI :- Implied Lapse a. Thus last legal proposition submitted by appellant herein that Section 140(1) and Section 140(8) signifies implied lapse of availed CENVAT Credit of Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess which were availed and lying unutilised in earlier regime and thus cannot be transitioned into GST Regime. Thus, in circumstances stated above and those urged in Grounds of Appeal and oral arguments, it is prayed that this Hon ble Court may be pleased to ALLOW Writ Appeal 53/2020 , pass such other order or orders as this Hon ble Court may deem fit and proper in circumstances of case and thus render justice." Contentions raised on behalf of Respondent/Assessee 21. On other hand, learned counsel for respondent Assessee, Mr.Raghavan Ramabadran, supported order of learned Single Judge and urged that as per CENVAT Rules, 2004, Assessee had already taken or availed credit of Education Cess and Secondary and Higher Education Cess paid by him on inputs and therefore, right to utilise same against Output Tax Liability was vested and indefeasible right of Assessee and could not be taken away by Legislature when switch over was made to GST Regime with effect from 01.07.2017. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 50 / 135 22. Elaborating his arguments, he submitted that present Assessee provides Countrywide Technical Services and Call Centre facilities to its customers, on centralised registration under provisions of CGST Act and therefore, in terms of Section 140(8) of CGST Act, it was entitled to avail credit of amount of CENVAT credit as defined in CENVAT Rules, 2004 against its Output Tax Liability even under GST Regime. He submitted that amendment to Section 140(1) by CGST (Amendment) Act, 2018 with retrospective effect from 01.07.2017 by insertion of words "of eligible duties" in Section 140(1) of Act and words "eligible duties and tax" did not affect Section 140(8) of Act, as no such similar insertions were made in Section 140(8) of Act and said Sub- section (8) of Section 140 independently covers case of present Assessee which entitled him to take such credit of Education Cess and Secondary and Higher Education Cess, even after introduction of GST Regime with effect from 01.07.2017. He submitted that such Cess was collected in form of duty and taxes only and therefore, even though they were imposed by Finance Act, collection of levy was in nature of duty or tax and same was liable to be set off and utilised against Output Tax http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 51 / 135 Liability. 23. Though learned counsel for Assessee admitted that cross utilisation of Cess against 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 CENVAT Rules, 2004 and Cess could be set off only against Output Levy of Cess while said imposition was operating, but, nonetheless, 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 form of TRAN-1 Form as required in new GST provisions was never objected to by Revenue authorities until impugned communication was issued to Assessee on 14.02.2018 which led to filing of writ petition. Therefore, learned Single Judge was justified in allowing same to Assessee. 24. learned counsel for Assessee also submitted that Explanation 1 and 2 of Section 140 of CGST Act clearly stipulated and while Explanation 1 talks of expressions "Eligible Duties" in Sub-sections (1), (3), (4) and (6) of Section 140, Explanation 2 talks http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 52 / 135 of expressions "Eligible Duties and Tax" in Sub-sections (1) and (5), under specified enactments mentioned in Explanations 1 and 2 and since Education Cess and Secondary and Higher Education Cess were not mentioned in those Explanations 1 and 2, therefore, Cess did not fall within ambit and scope of "Eligible Duties" or "Eligible Duties and Taxes" and claim of Assessee with respect to set off could not be denied on anvil of said expressions. He also submitted that CGST (Amendment) Act, 2018 insofar as it amended Explanations 1 and 2 to Section 140 were not yet enforced and would be so enforced from date which was yet to be notified and therefore, Assessee's claim under Section 140(8) of Act could not be defeated taking help of Explanation 3 as well. Explanation 3 was inserted in Section 140 also by CGST (Amendment) Act, 2018, with retrospective effect from 01.07.2017 when GST Regime was made operational. 25. learned counsel for respondent Assessee also relied upon case laws which will be discussed hereafter. 26. learned counsel for Assessee also filed his written http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 53 / 135 submissions and same is taken on record and it is extracted as under, which we have considered. WRITTEN SUBMISSIONS ON BEHALF OF 1stRESPONDENT (ASSESSEE) Issue involved: Can CENVAT credit of Education Cess ( Edu Cess ), Secondary & Higher Education Cess ( SHE Cess ) and Krishi Kalyan Cess ( KKC ) (collectively referred to as Cesses ) which are validly availed and lying unutilized as per last return filed for period ending 30th June 2017, be transitioned into GST regime? Respondent Assessee s submissions: A. Unutilised CENVAT credit can be transitioned under Section 140(8) of CGST Act. A.1 assessee had Centralized registration under Finance Act, 1994 and impugned Cess credits were being carried forward in periodic Returns and declared as unutilized credit in their Return (in Form ST-3 for service tax assessees) filed for period ending June 2017. This is undisputed fact. A.2 factum of valid availment (act of taking credit does not denote utilization or adjustment) of impugned Cess credit is undisputed. A.3 Hence, eligibility to impugned Cess credit till 30th June 2017 cannot be disputed. (Refer para A.11 below) A.4 credit which is validly availed under erstwhile laws (here, Cenvat Credit Rules, 2004) and lying unutilized as on 30 June 2017 can be transitioned into GST regime only through Section 140 of CGST Act. In other words, http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 54 / 135 Section 140 of CGST Act is only provision which provides for mechanism of transitioning credits eligible under erstwhile laws into GST regime. Each sub-Section of 140 deals with specific scenario A.5 said provision consists of several sub-sections, each of which is in relation to specific independent scenario of transition. following table would illustrate purpose of each sub-Section of Section 140. Sub-Section Purpose 140(1) Transition of already availed cenvat credit reflected in last Returns filed under erstwhile laws. It is based on credit availed and remaining unutilized in Returns. 140(2) It covers transition of unavailed credit on capital goods under erstwhile laws. CCR restricts credit on capital goods for first year to be 50%. remaining portion of credit unavailed, which is not covered under Returns filed under erstwhile laws, is granted. It is not covered under Section 140(1). 140(3) It covers registered person who was enjoying exemption from output liability under erstwhile laws but is subject to GST liability. It grants credit in respect of inputs lying in stock as on 01.07.2017. It is not covered under Section 140(1). 140(4) It covers registered person who was engaged in both taxable and exempted activities under erstwhile laws but is now wholly subject to GST liability. It grants credit as reflected in last Returns filed and also credit in respect of inputs lying in stock as on 01.07.2017. It is not covered under Section http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 55 / 135 140(1). 140(5) It covers situation of goods in-transit, invoices in transit and like where duty/tax has been paid under erstwhile laws and actual receipt of inputs/ input services is after introduction of GST. It grants credit in respect of those duty/tax paid documents within period of 30 days from receipt. It is not covered under Section 140(1). 140(6) It covers situation wherein registered person was paying duty based on capacity of manufacture, taxes under composition scheme and like but has chosen to discharge GST liability at normal rates. It grants credit in respect of inputs lying in stock as on 01.07.2017. It is not covered under Section 140(1). 140(7) It provides for distribution of credit availed by Input Service Distributor in respect of services received prior to GST. It is not covered under Section 140(1). 140(8) It provides for transition of CENVAT credit in respect of centralized registered person under Finance Act, 1994. It is not covered under Section 140(1) according to assessee. 140(9) It provides for taking recredit of CENVAT credit on input services in situation where it is reversed for non-payment of consideration within three months. It is not covered under Section 140(1). A.6 It is submitted that there is no overlap in situations contemplated in each sub-Section of Section 140. Thus, each http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 56 / 135 sub-Section is independent, stand alone and self-contained dealing with separate scenarios, enabling seamless transition of credit. A.7 While Section 140(1) governs situation of transition of credits lying unutilized in last return filed under erstwhile laws, very similar phraseology is also available in Section 140(8). only difference between Section 140(1) and Section 140(8) is that sub-Section (8) deals specifically to case of dealers having centralized registration while sub- Section (1) does not have such qualification. If both 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 case of dealers having centralized registration. Thus, both 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 assessee was having centralized registration, assessee s case would be squarely covered by Section 140(8) being specific provision as compared to Section 140(1). A.9 Section 140(8) of CGST Act states that registered person having centralized registration under existing Law (Finance Act, 1994) and has obtained registration under CGST Act, shall be allowed to take (avail), in his electronic credit ledger, credit of amount of CENVAT Credit carried forward in returns, furnished under existing law (ST-3 Returns) in respect of period ending with day immediately preceding appointed day (April- June 2017) in such manner as may be prescribed. First Proviso states that if last period s Returns under existing law is filed within three months of appointed day, credit as reflected in original/revised Return shall be http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 57 / 135 allowed. assessee filed ST-3 Returns for April-June 2017 using this extended time period provided. Second Proviso states that credit shall not be allowed unless it is eligible as Input Tax Credit under GST. It is admitted position that second Proviso is not attracted in present case. Further, third Proviso to Section 140(8) of CGST Act states that such credit may be transferred to any of registered persons having same PAN for which centralized registration was obtained under existing law. A.10 Explanation to Section 143 of CGST Act states that term CENVAT credit shall have same meaning as assigned to it under Central Excise Act, 1944 ( Excise Act ) or rules made thereunder for purpose of Chapter on transitional provisions. A.11 Cenvat Credit Rules, 2004 ( CCR , in short) was framed under powers conferred by Section 37 of Central Excise Act, 1944 ( Excise Act ). Rule 3(1) of CCR is provision allowing persons to take (avail) CENVAT credit. It enumerates various duties and taxes that can be taken as CENVAT credit. Education Cess and Secondary and Higher Education Cess are enumerated under clause (vi) and (via) respectively. Further, as per Rule 3(1a) of CCR, Krishi Kalyan Cess can also be taken as CENVAT credit. Hence, all three Cesses qualify to be CENVAT credit as per Rule 3(1) of CCR. A.12 Thus on plain construction of Section 140(8), credit of Cesses is eligible to be transitioned. submission of Appellant Department that words eligible duties should be read into Section 140(8) would amount to causing violence to provision and hence impermissible. A.13 When Legislature introduced words eligible duties by way of retrospective amendment in Section 140(1) vide Central Goods and Services Tax (Amendment) http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 58 / 135 Act, 2018 ( Amendment Act ), it has deliberately chosen not to amend sub-Section (8). Hence, purpose and intent behind non-amendment should be imputed and thereby wisdom of Legislature should be respected. Therefore, said expression eligible duties ought not to be read into 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 oversight by Legislature as was submitted by Appellant Department. A.14 Further, it is settled position that Courts do not read words and expressions not found in provision/statute as it would amount to venturing into 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 exercise would amount to situation of casus omissus which is impermissible for Courts to do. Therefore, these words cannot be supplied into provisions. Reliance in this regard is placed on UOI Vs. Deoki Nandan Aggarwal 1992 AIR 96 SC [paragraph 14], B.R. Kapur v. State of T.N. &Anr. (2001) 7 SCC 231[paragraph 39] and UOI v. Dharmendra Textile Processors 2008 13 SCC 369 [paragraph 16]. A.15 Appellant Department has placed reliance on Dilip S Dhanukar v. Kotak Mahindra Ltd. & Ors. [MANU/SC/8289/2007] for adopting purposive interpretation. said decision was rendered in context of personal liberties of accused while interpreting criminal law provisions and Article 21. same principle cannot be applied for interpreting taxing statutes wherein, as stated above, it has been held time and again that literal interpretation ought to be adopted. Further reliance is also placed on CST v. Modi Sugar Mills Ltd. AIR 1961 SC 1047 http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 59 / 135 and Ind-Swift Laboratories Ltd. case (supra), which was held in context of CENVAT Credit itself. A.16 Further, it is submitted that assessee has all along maintained its claim under Section 140(8) and never had forsaken it. It is not case of Appellant/Department that assessee does not fall under Section 140(8). In any case, even assuming without conceding that said claim was forsaken, reliance is placed upon Hon ble Supreme Court decision in Share Medical Care v. UOI 2007 (209) ELT 321 (SC) to advance argument that there is no estoppel in claiming benefit at later stage. It was held therein that even if applicant does not claim benefit at initial stage, he is not debarred, prohibited or estopped from claiming such benefit at later stage. B. Alternatively, transitional credit is valid under Section 140(1). B.1 Section 140(1) of CGST Act states that person registered both under existing law and GST, shall be allowed to take, in his electronic credit ledger, credit of amount of CENVAT Credit of eligible duties carried forward in returns, furnished under existing law by him (ST-3 Returns) in respect of period ending with day immediately preceding appointed day (April-June 2017) in such manner as may be prescribed. It is admitted position that provisos to Section 140(1) are not attracted in present case. B.2 submissions in paragraph A10 & A11 above on meaning of CENVAT credit and how Cesses are covered under same in context of Section 140(8) is applicable to Section 140(1) as well. B.3 assessee submits that true meaning of term eligible duties in Section 140(1) needs to be then examined. B.4 term eligible duties is defined in Explanation 1 to http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 60 / 135 Section 140 as being applicable to transition of credit under Section 140(6). It is for this reason that it states that same would mean duties enumerated therein, paid on inputs held in stock and inputs contained in semi-finished or finished goods held in stock on appointed day. Though Amendment Act proposed to extend it to Sub-sections 1,3 & 4 of Section 140(1) as well, same is not in force as 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 mere inadvertent error but deliberate decision. Hence, purpose of not notifying should be looked into. Therefore, said expression eligible duties in Section 140(1) ought not to be read as defined under Explanation 1 to Section 140, which is for wholly different purpose and situation. B.5 Since Explanation 1 of Section 140 cannot be attracted and Explanation 2 is not applicable, eligible duties in 140(1) is to be understood in its normative sense. In context of CENVAT credit, it is submitted that it ought to be understood as duties which are eligible for availmentas CENVAT credit. Impugned Cesses are duties of excise though not Basic Excise Duty. B.6 It is submitted that impugned Cesses are duties of excise/ taxes. These Cesses are imposed on event of manufacture/ provision of service and therefore, it would partake character of duties of excise or tax on service, as case may be. B.7 Edu Cess and SHE Cess were levied on manufactured goods based on powers conferred under Entry 84 of Union List, Seventh Schedule to Constitution. same, prior to 101st Constitutional Amendment Act, reads as follows: Duties of excise on tobacco and other goods manufactured or produced in India except http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 61 / 135 (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry. B.8 Hon ble Supreme Court in case of Governor General- in Council v. Province of Madras 1954 SCR 1046 [paragraph 23 in Hingir-Rampur decision at page 98 in Assessee Respondent s paperbook dated 30th September 2020] has held that duty of excise is primarily duty levied on manufacturer or producer in respect of commodity manufactured or produced. It is on account of this reason that charging Section of Edu Cess and SHE Cess on excisable goods under Finance Act 2004 and Finance Act, 2007 levy it as duties of excise. Impugned Cesses are levied as tax and not as fee. B.9 It is further submitted that all impugned Cesses are levied as duties and taxes and not as fee. While assessee elaborates same infra, it is not case of assessee that these Cesses are basic excise duty levied under Central Excise Act. In other words, this is cess levied as duty and it is in character of duties of excise but it is not excise duty per se. B.10 Further, Edu Cess and SHE Cess on taxable services and KKC are also covered under term eligible duties in Section 140(1) as term duties encompasses taxes within its ambit as well. Article 366(28) of Constitution defines taxation to include includes imposition of any tax or impost, whether general or local or special and that term tax shall be construed accordingly. Department s Circular in No. 87/06/2019-GST dated 02.01.2019 states that term duties and taxes are used interchangeably [paragraph 3.1.(iii) at page 30 of paperbook dated 23rd January http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 62 / 135 2020]. Hence, Edu Cess and SHE Cess on taxable services and KKC, being in nature of taxes, are also covered under term eligible duties in Section 140(1). B.11 Much reliance has been placed by 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 outset it is submitted that same are not relevant for issue in hand. In Modi Rubber Ltd. case, 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. Court held that power to grant exemption under Rule 8(1) is only in respect of basic excise duty under Excise Act. Therefore, any Notification issued under said Rule cannot be read as extending benefit to levies created under different Enactment like Finance Acts. In other words, this decision is not authority on point whether special excise duties are duties of excise or not. Similarly, in Unicorn Industries case, issue was whether exemption Notification issued under Section 5A of Excise Act can be automatically applied for claiming exemption from Cesses levied under various Finance Acts. It is submitted that none of these are authorities to decide whether cesses are duties of excise. only conclusion that can be drawn from these cases at best is that Cesses levied under Finance Acts are not Basic Excise Duty. assessee also admits to this legal position and therefore, reference to these decisions do not advance case of either side in this Writ Appeal. Explanation 2 and 3 to Section 140 are not attracted. B.12 It is submitted that Explanation 2 to Section 140 defines expression eligible duties and taxes . said definition is irrelevant for both Section 140(1) and 140(8) as same is not employed therein. Further, amendment sought to be made under Amendment Act to extend application of definition to Section 140(1), has not been notified in http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 63 / 135 respect of this Explanation 2 as well. B.13 Further, Explanation 3 to Section 140 clarifies that expression eligible duties and taxes does not include any Cess not mentioned in Explanation 1 and Explanation 2. This Explanation 3 insertion to Section 140 of CGST Act has been notified. However, as stated earlier, since expression eligible duties and taxes is not employed either in Section 140(1) and Section 140(8) and Explanation 3 being only in nature of explaining scope of said expression, said Explanation 3 becomes irrelevant in understanding scope and coverage of Section 140(1) and Section 140(8). Hence, same is not applicable to present case even though it has been notified. C. Cesses are in nature of duty and not fee. C.1 In case of Hingir-Rampur Coal Ltd. v. State of Orissa AIR 1961 SC 459, Constitution Bench of Hon ble Supreme Court affirmed basic tests, laid down in previous cases, for determining character of cess levy whether it is in nature of tax or fee. It held that tax is imposed for public purposes and is not, and need not, be supported by any consideration of service rendered in return, whereas fee is levied essentially for services rendered and as such there is element of quid pro quo between person who pays fee and public authority which imposes it. It further held that tax recovered by public authority invariably goes into Consolidated Fund which ultimately is utilised for all public purposes, whereas cess levied by way of fee is not intended to be, and does not become, part of Consolidated Fund. It is earmarked and set apart for purpose of services for which it is levied. C.2 Reliance in this regard is also placed on following cases. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 64 / 135 Case law Reference paragraph numbers Shinde Brothers v. Deputy 26 to 31, 66 & 67 Commissioner AIR 1967 SC 1512 Tamilnadu Minerals v. Joint 21 to 27 Commissioner (2019) 414 ITR 196 (Mad) Shri Krishna Rubber Works v. UOI 30 to 42 1970 SCC Online Bom 90 C.3 Further, Hon ble Karnataka High Court in case of CCE v. Shree Renuka Sugars Ltd. 2014 (302) ELT 33 (Kar), while holding that Sugar Cess is in nature of tax/duty, held that if cess levied and collected is credited to Consolidated Fund of India and it has to be appropriated by Parliament by law and then only said amount could be credited to Fund; it ceases to be fee and partakes character of duty or tax. C.4 conjoint reading of all above judgements would clearly indicate that when impost (by whatever name called) goes to Consolidated Fund of India and not to any specific fund earmarked for purpose, then such impost would acquire character of taxes and not fee. Impugned Cesses collected form part of Consolidated Fund of India C.5 Supplementing this submission, reference is next made to treatment of impugned Cesses collected by Central Government with aid of provisions in Constitution and Comptroller & Auditor General of India ( CAG ) Reports. C.6 As per Article 266(1) of Constitution, all revenues collected by Central Government shall form part of Consolidated Fund of India. As per Article 266(2), all public http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 65 / 135 monies collected shall be credited to Public Account of India. As per Article 266(3), no money collected in Consolidated Fund of India can be appropriated except with authority of law and for purposes and in manner mentioned in Constitution. Therefore, all taxes are credited into Consolidated Fund of India and used through appropriation law passed. Whereas, any Cess collected as fee is collected in specific public account for purposes mentioned and does not go into Consolidated Fund of India. Further, as per Article 114(3) of Constitution, no money can be withdrawn from Consolidated Fund of India without appropriation made under law in accordance with Article 114. C.7 CAG Reports relied upon by assessee clearly establish that Cesses are collected into Consolidated Fund of India and not credited into any specific fund set up for this purpose. [pages 78, 78A, 81 para 2.3.3, 84, 89 of paperbook dated 30th September 2020]. In fact no Fund has ever been created for purpose and portion of collections has been only transferred to Major head of account as part of Reserve Funds in Public Accounts. money has not been spent either for stated purposes. C.8 In CAG Report for FY 2014-15, it has been stated that non-lapsable fund for elementary education known as Prarambhik Shiksha Kosh (PSK) was created in 2005-06 under non-interest bearing section of reserve funds in Public Account. Further, it states that Edu Cess is initially credited into Consolidated Fund of India and that there is no correlation between collection of Edu Cess and amount transferred into such PSK fund created. In respect of SHE Cess it states that there is neither fund was designated to deposit proceeds of SHEC thereto nor schemes identified on which cess proceeds were to be spent. C.9 CAG Report for FY 2016-17 states that SHE Cess http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 66 / 135 collected by Central Government is credited into Consolidated Fund of India without creation of even reserve fund in Public Account. It also shows short- transfer into specified funds under Public Account in respect of Edu Cess and KKC. C.10 CAG Report for FY 2017-18 states that SHE Cess is retained in 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 above CAG Reports evidence that Impugned Cesses are retained in Consolidated Fund of India or are merely accounted under distinct treasury account name in Public Account.Thus, it is submitted Cesses having been deposited into Consolidated Fund of India and there being no quid pro quo between collection and expenditure of these Cesses, they are in nature of tax and not fee. C.12 It is submitted that it is for these reasons, even Hon ble Delhi High Court in Cellular Operators Association of India v. UOI (2018) 14 GSTL 522 (Del.) at paragraph 12, held that Edu Cess and SHE Cess are in nature of taxes and not fees, even though it is not excise duty or service tax per se. It has also been consistent stand of Assessee Respondent that impugned cesses are not Excise Duties per se but only duty of excise. Nomenclature is not relevant for determining nature of levy. C.13 Reliance is also made on Vijayalakshmi Rice Mill &Ors. V. CTO (2006) 6 SCC763 wherein it has been held that nomenclature is not relevant for determining whether Cess is tax or fee [paragraphs 14 & 15 at page 195 of paperbook dated 30th September 2020]. As illustration, http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 67 / 135 reference can be made to Goods and Services Tax (Compensation to States) Act, 2017. Even though it is termed and collected as Cess, preamble to said Act has no semblance of Cess levy. said Preamble reads as, to provide for compensation to States for loss of revenue arising on account of implementation of goods and services tax.. . Thus, it is levied purely as revenue generation measure, though nomenclatured as Cess. C.14 In light of above, EC, SHE Cess and KKC are in nature of tax/duty only and not in nature of fee. D. CENVAT Credit validly availed is vested and indefeasible right. D.1 It is submitted that Impugned cesses were imposed under various Finance Acts and their levy were subsequently abolished. It is undisputed fact that CENVAT Credit of these Cesses are availed through provisions of CCR. CCR has been enacted using powers conferred under Section 37 of Excise Act. It is further submitted that Section 38A(c) of Excise Act specifically saves any right accrued under any Rule amended, repealed, superseded or rescinded. Hence, while levy was abolished, CENVAT Credit availed under Rule 3 of CCR is specifically saved under Section 38A of Excise Act. D.2 Assessee submits that CENVAT Credit of Cesses validly availed by assessee is vested and indefeasible right and cannot be taken away without authority 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 following cases wherein it has been held that credit validly availed is vested right under money credit scheme and assessee was allowed to be utilize such credit even after abolishing of Notification http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 68 / 135 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 said CENVAT credit pertaining to Impugned Cesses. Section 37(xxviii) of Excise Act specifically confers powers on Central Government to frame Rules for lapsing credits lying unutilized. Thus, lapsing of credits can happen only through framing of Rules for purpose. It can never be through mere implication. D.5 It is submitted that had intention of Central Government been to lapse such CENVAT credit, it ought to have enacted lapsing provisions on lines of Rule 11(2), 11(3), 11(4) of CCR etc. Even under prior excise credit regime, whenever it was intention of Central Government to take away existing un-utilized credits, same was done by specific lapsing provision such as Rule 57F (4A) of Central Excise Rules, 1944. This was worked out based on Hon ble Supreme Court decision in Eicher Motors (supra) (judgment dated 28.01.1999), wherein Section 37 of Excise Act was amended to bring in Section 37(xxviii) which conferred power on Government to notify lapsing of credit. This was amended with retrospective effect from 16.03.1995 (through Finance Act, 1999) to take care of lacunae pointed out in Eicher Motors case. Unlike above, Government has not exercised its powers under Section 37(xxviii) of Excise Act to lapse CENVAT credit of EC, SHE Cess and KKC lying unutilized. In absence of same, there cannot be any implied lapse. D.6 Hence, argument of Appellant Department that http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 69 / 135 lapsing of CENVAT Credit of Cesses has worked out itself without any exercise of power under Section 37(xxviii) of Excise Act is not in line with Eicher Motors case. D.7 It is admitted position that no Rule has been framed by Central Government under Section 37(xxviii) of Excise Act for lapsing of unutilized CENVAT Credit of Impugned Cesses. D.8 In light of above, it is submitted that CENVAT Credit of Impugned Cesses lying unutilized as on 30.06.2017 cannot be denied as already lapsed. E. concept of availment and utilization of CENVAT credit are distinct and cannot be mixed or used interchangeably. E.1 It is submitted that bar on utilization of CENVAT credit of Education Cess and Secondary and Higher Education Cess until 30.06.2017 does not ipso facto vitiate validity of availment of such CENVAT credit. It is submitted that concept of availment and utilization are distinct and cannot be used interchangeably. This can be seen evidently seen from reading of expression contained in Rule 3(1) [taking credit] as against Rule 3(4) [utilization of credit] when read along with Rule 14. E.2 Further reliance is placed on decision of Hon ble Supreme Court decision in Union of India v. Ind-Swift Laboratories Ltd. 2011 (265) ELT 3 (S.C.). issue before court was whether interest liability under Rule 14 of CCR would kick in from date of taking CENVAT credit or from date of utilization of such CENVAT credit taken. relevant phrase in Rule 14 read as Where CENVAT credit has been taken or utilized wrongly or has been erroneously refunded . While holding that interest is payable from date of taking CENVAT credit itself, Hon ble Court acknowledged that taking credit and that of utilization of such credit taken are two distinct transactions. It was also http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 70 / 135 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 effect of amendment to Rule 6(3) of CCR w.e.f. 01.04.2008, Board has clearly admitted 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 Appellant Department to submit that dead claims cannot be revived.In first case, assessee had not availed credit but was yet to avail credit. Court held that there is no inherent right to avail credit. In present case, credits have been already availed within time-limit prescribed under CCR. Hence, said decision is not applicable. E.5 latter case is on issue of rebate wherein, again assessee did not claim it within time-limit. Both these decisions do not deal with right that has legally vested already.Hence, same are not applicable. Hon ble Delhi High Court decision in Cellular Operators Association v. Union of India 2018 14 GSTL 522 (Del.) is not applicable to facts of present case. E.6 Edu Cess and SHE Cess was levied by Central Government. As stated above, Edu Cess and SHE Cess paid by service provider/ manufacturer on their input services/inputs, were made eligible as CENVAT credit as per http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 71 / 135 Rule 3(1)(vi) & (via) of CCR. Rule 3(7) of CCR provided for utilization of CENVAT credit of Edu Cess and SHE Cess for payment of output Edu Cess and SHE Cess respectively. However, vide Notification 15/2015-C.E dated 01.03.2015, Central Government exempted levy of Education Cess and Secondary and Higher Education Cess w.e.f. 01.06.2015. Therefore, as on 01.06.2015, CENVAT credit of Education Cess and Secondary and Higher Education Cess availed validly and lying in books could not be utilized for payment of any output tax liability. E.7 This inability to utilize CENVAT credit of Edu Cess and SHE Cess after 01.06.2015 was challenged before Hon ble Delhi High Court in Cellular Operators Association v. Union of India (2018) 14 GSTL 522 (Del.). In other words, case before Hon ble High Court was with regard to whether Edu Cess and SHE Cess lying un-utilised as CENVAT credit as on date of their abolishment can be utilised for payment of Basic Excise Duty, Service Tax, etc. This judgment nowhere discussed validity of CENVAT Credit of Edu Cess and SHE Cess availed and lying un- utilized in books. In other words, it is on utilization of credit as per then existing provisions of law and not on availment. Further, even such restriction on utilization was upheld only on account of express statutory bar to that effect in Rule 3(7)(b) and not on account of nature of those Cesses (being in nature of tax or fee) or any such reasons. E.8 Hence, it is submitted that ratio of said decision is not relevant to facts of present case. E.9 It is also submitted that restriction on cross-utilization under erstwhile regime has no bearing on issue involved. Even National Calamity Contingent Duty, which is Cess and contained similar restriction on cross-utilization under erstwhile regime has been allowed to transition into GST. Hence, it is submitted that Cess whose cross- http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 72 / 135 utilization was restricted being transitioned into GST is not alien and unheard of to Appellant Department. In light of above, it is submitted that this Hon ble Court may be pleased to dismiss 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 Output GST Liability under Section 140 of CGST Act, are as under. 27. Firstly, we may state that obviously, there is no intendment or equity about taxation and both charging provisions as well as exemption provisions in taxing statutes have to be strictly construed and Golden Rule of Interpretation of plain language being given plain meaning is cardinal principle applicable to taxing statutes. 28. Cess being specially collected or enforced imposition or impost is slightly different from Tax or Duty, even though it may be collected in form of Taxes or Duty under parent law with which charging provisions of Cess under same Act or separate Act as they are read and applied mutatis mutandis, like Central Excise and Customs Duty Act. Even though imposition and collection of Cess http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 73 / 135 may be loosely termed as Tax or Duty, collection of Cess remains distinct, inasmuch as Cess amount collected by Government is liable to be spent for avowed and dedicated purpose for which such imposition was made which is usually reflected in name of imposition itself like Education Cess, Secondary and Higher Education Cess etc. Mere facility of taking credit of Input Cess paid on Input goods or services just to avoid cascading effect on multiple transactions in series does not militate or alter character of imposition of Cess itself. Like any other indirect taxes like Sales Tax, VAT, Excise Duty, etc., removal of cascading effect of Taxation in multiple transactions in series is provided by Legislation to collect such taxes in reasonable proportion to value of transactions, by removing cascading effect by providing for Input Tax Credit (ITC) system. 29. Section 140 of CGST Act, 2017, with which we are concerned and which provides for transitional arrangement of Input Tax Credit, though comprises of 10 Sub-sections and Explanations 1, 2 and 3 after such 10 Sub-sections, are commonly applicable tools of interpretation. Explanation 1 refers to Sub-sections (1), (3), (4) http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 74 / 135 and (6), because these four Sub-sections use and employ term Eligible Duties and Explanation 1 confines "Eligible Duties" to 7 specified duties under that Explanation 1, namely Additional Excise Duty under Additional Duties of Excise (Goods of Special Importance) Act, 1957, Additional Duty under Custom and Tariff Act, 1975, Additional Custom Duty on Taxable Articles, Duty of Excise in First Schedule to Central Excise Tariff Act, 1985 and National Calamity Contingency Duty under Section 136 of Finance Act, 2001, etc. 30. Therefore, only seven specified duties as Eligible Duties in respect of inputs held in stock and inputs contained in semi finished or finished goods held in stock on 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 seven categories in Explanation 1. Therefore, on 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 Act. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 75 / 135 31. Similarly, Explanation 2 refers to Sub-sections (1) and (5) of Section 140 even though 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 eight specified Eligible Duties and Taxes , first seven are repeat of Explanation 1 "Duties" and eighth one is Service Tax, eligible to be set off and carry forward under CGST Act, 2017. 32. closer examination of Explanation 1 and Explanation 2 would indicate that while first 7 items in Explanation 1 are just repeated in Explanation 2 and we cannot impute any redundancy for such repetition to Legislature, only Clause (viii) in Explanation 2 included Service Tax leviable under Section 66B of Finance Act, 1994 in respect of inputs and input services received on or after appointed day, while Explanation 1 talks of inputs held in stock on appointed day 01.07.2017. 33. distinction between Explanation 1 and Explanation 2 is that while Explanation 1 was intended to apply for input Eligible http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 76 / 135 Duties in respect of stocks and inputs contained in semi-finished or finished goods held in stock as on 01.07.2017, specified 8 taxes and duties were applicable in respect of inputs and services received on or after 01.07.2017, appointed day under GST Law. addition of words "and Taxes" with "Eligible Duties" in Explanation 2 appears to be only on account of addition of "Service Tax" in Explanation 2 which specifies eight duties and taxes for set off. 34. Referring to Sub-section (5), which uses terms Eligible Duties and Taxes will make this purpose of inserting Explanation 2 in Section 140 clear because Sub-section (5) only permits such credit to be taken even after such input services are paid before appointed date of 01.07.2017, but invoices in respect of them are received after said appointed day of 01.07.2017 for which time period of 30 days is prescribed and said period can still be extended by another 30 days for reasons to be recorded by Commissioner. Therefore, Legislature has very carefully specified duties and taxes in respect of stocks held for which requisite declaration in Form TRAN-1 is submitted as on 30th June 2017 and also service tax in respect http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 77 / 135 of services which are input services received before 30th June 2017 of which invoices may not have been received before that date and therefore, relaxation of 30 days is provided for them. Therefore, Court by any intendment or implication cannot include aforesaid three types of Cesses, with which we are concerned, in terms of "Eligible Duties and Taxes" or "Eligible Duties" with reference to Explanation 1 and Explanation 2 to be carried forward and transitioned under Section 140 of Act. 35. Legislature took further care by inserting Explanation 3 which is couched in negative terms and for removal of any doubt, it further clarified that such eligible duties and taxes will exclude 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 Finance Act, 2001, though named it as duty was, in fact, Cess and that fund was created to meet expenditure to manage any national calamity. But, set off thereof has been specifically allowed by Legislature possibly because that levy imposed under Finance Act, 2001 continued even after GST Regime was in force with effect from 01.07.2017. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 78 / 135 36. But, as noted above, 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 purpose of Section 140, makes intention of Legislature very clear and Sub-section (8) of Section 140, which was emphasized by learned counsel for Assessee before us, is not excluded from effect and operation of Explanation 3, because exclusion is of any Cess which has not been specified in Explanations 1 and 2, Education Cess and Secondary and Higher Education Cess and Krishi Kalyan Cess are not included in Explanations 1 and 2 at all. Therefore, exclusion of Education Cess and Secondary and Higher Education Cess for purpose of carry forward and set off under Section 140 is specifically provided in Explanation 3, which is clearly applicable to gather legislative intent, irrespective of piecemeal enforcement of Explanations 1 and 2 by Legislature. Explanation 3 has its own force and application and does not have limited application only via route of Explanation 1 and Explanation 2. Departmental Circular dated 02.01.2019, quoted above, in our opinion, rightly clarified this position with http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 79 / 135 reference to Explanation 3 to Section 140 of Act. 37. Sub-section (8) of Section 140 provides for registered person having centralized registration under existing law shall be allowed to take in his Electronic Credit Ledger, credit of amount of CENVAT Credit carried forward in Return furnished under existing law by him in respect of period ending with day immediately preceding appointed day. Proviso requires such registered person to furnish Return and Second Proviso further provides that registered person shall not be allowed to take credit unless said amount is admissible as Input Tax Credit under CGST Act. 38. Merely because Assessee in present case before us is person having centralized registration has "taken" in his Electronic Credit Ledger amount of such Education Cess and Secondary and Higher Education Cess, it does not entitle him to utilize said unutilised amount of Education Cess and Secondary and Higher Education Cess against Output GST Liability. "taking" of input credit in respect of Education Cess and Secondary and Higher http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 80 / 135 Education Cess in Electronic Ledger after 2015, after levy of Cess itself ceased and stopped, does not even permit it to be called input CENVAT Credit and therefore, mere such accounting entry will not give any vested right to Assessee to claim such transition and set off against such Output GST Liability. emphasis on words "taken" or "availed" in contrast with words "utilised", "adjusted" or "set off" laid by learned counsel for Assessee is, with respects, misplaced. These words do not lie in independent watertight silos or compartments. They are rather synonymous in context of controversy we are dealing with. Finally, what is important is whether Assessee gets Education Cess, Secondary and Higher Education Cess transitioned under Section 140 of CGST Act or not. It is like Input Credit being 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 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 http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 81 / 135 will not confer any such right on Assessee and as Lord Russell pointed out in Income Tax matter in case of BSC Footwear Ltd. v. Ridgway (Inpsector of Taxes) [(1972) 83 ITR 269] that Income Tax Law does not march step by step in divergent footprints of accountancy provisions. Rightly so, mere accounting practice and accounting entries do not confer right on Assessee in taxation laws much less vested right which cannot be undone or curtailed by statutory provisions. Therefore, claim of Assessee based on carry forward of unutilised Education Cess and Secondary and Higher Education Cess in Electronic Ledger does not better its claim in any manner. 40. Admittedly, since cross utilization of Education Cess and Secondary and Higher Education Cess was not allowed against Excise Duty and other duties under existing law prior to GST Regime and they could be set off only against Output Education Cess and Secondary and Higher Education Cess liability, once levy itself ceased and dropped in 2015, question of their carry forward and utilization becomes only academic. Sub-section (8) of Section 140 and for that other matter, any of Sub-sections of Section 140 are not http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 82 / 135 provisions in watertight compartments and do not operate in silos and harmonious reading of various Sub-sections of Section 140, together with three Explanations at end of Section 140, has to be made by Court to give it purposeful meaning for transition of Input Tax Credit, against Output GST Liability. different Sub-sections of Section 140 only identify class of Assessee; but common thread of entitlement to carry forward and set off runs through them, of course, subject to Explanations 1, 2 and 3 appended to Section 140 of Act. If one carefully compares all Sub-sections of Section 140, one can discern that while all other Sub-sections talk of "entitled to take credit", Sub-section (8) uses word "allowed to take". utilisation of such credit, even if taken in Electronic Ledger and notified in Form TRAN-1, does not guarantee any such right of utilisation independent of other parts of Section 140 specially ignoring Explanation 3. Sub- section (8), therefore, cannot be said to be independent Code of law for dealers holding centralised registration, as canvassed. 41. contention of learned counsel for Assessee that Assessee was having centralized registration and Input Education Cess and Secondary and Higher Education Cess being CENVAT under http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 83 / 135 Cenvat Rules, 2004, deserve to be carried forward and allowed as set off against GST Liability, merely because it had carried forward same in Centralised Electronic Credit Ledger, has no substance. Merely because revenue authorities, after cessation of levy of Education Cess and Secondary and Higher Education Cess in year 2015 did not take any action in contemporary period, until impugned communication was issued to Assessee on 09.02.2018, which triggered filing of writ petition and asked Assessee to reverse that entry in Electronic Ledger, it does not mean that Assessee became so entitled to carry forward even dead claim of unutilised Education Cess and Secondary and Higher Education Cess against Output GST Liability after 01.07.2017. set off and such adjustments could be allowed only if it clearly fell within definition of Eligible Duties or Eligible Taxes and Duties as defined in Explanations 1 and 2. On 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 http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 84 / 135 allowed to be transitioned not as CENVAT credit, but because it is specifically included as "Eligible Duties" in Explanations 1 and 2 of Section 140 of Act. 42. We found considerable force in contention raised on behalf of Revenue before us that credit of such Education Cess and Secondary and Higher Education Cess which could not be utilised against Output Education Cess and Secondary and Higher Education Cess Liability, while said impost was in force prior to Finance Act, 2015, became dead claim in year 2015 itself and therefore, there was no question of allowing carry forward and set off after gap of two years against Output GST Liability with effect from 01.07.2017. 43. What we have stated above is supported by recent judgment of Hon ble Supreme Court in case of Unicorn Industries v. Union of India [decided on 6th December 2019 reported in (2020) 3 SCC 492] rendered after judgment of learned Single Judge dated 05.09.2019 impugned before us and therefore, same could not be brought to notice of learned http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 85 / 135 Single Judge. 44. Hon ble Supreme Court, in case of Unicorn Industries v. Union of India [(2020) 3 SCC 492] followed earlier decision in Union of India v. Modi Rubber Limited [(1986) 4 SCC 66] and also held earlier two judgments of Supreme Court by two Judges Bench as per incuriam and concluded that Notification containing exemption from payment of basic duty of excise for goods specified in Notification dated 09.09.2003 and cleared by its units located in State of Sikkim had no reference to exemption to other duties like National Calamity Contingent Duty (NCCD), Education Cess and Secondary and Higher Education Cess and therefore, said Notification dated 09.09.2003 could not by implication be extended to exempt even levy of these Cesses in form of National Calamity Contingent Duty, Education Cess and Secondary and Higher Education Cess. relevant extract from said judgment from Head Note of SCC is quoted below for ready reference. "It is obvious that when notification granting exemption from duty of excise is issued by Central http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 86 / 135 Government in exercise of power under Rule 8(1) simpliciter, without anything more, it must, by reason of definition of "duty" contained in Rule 2(v) which according to well-recognised canons of constructiion would be projected in Rule 8(1), be read as granting exemption only in respect of duty of excise payable under Central Excise Act, 1944. Undoubtedly, by reason of Section 32(4) of Finance Act, 1979 and similar provision in other Finance Acts, Rule 8(1) would become applicable empowering Central Government to grant exemption from payment of special duty of excise, but when Central Government exercises this power, it would be doing so under Rule 8(1) read with Section 32(4) or other similar provision. reference to source of power in such 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 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 exemption is granted under 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 : http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 87 / 135 1986 SCC (Tax) 781, followed. Notification dated 9-9-2003 issued in present case makes it clear that exemption was granted under Section 5-A of 1944 Act, concerning additional duties under 1957 Act and additional duties of excise under 1978 Act. It was questioned on ground that it provided for limited exemption only under Acts referred to therein. There is no reference to Finance Act, 2001 by which NCCD was imposed, and Finance Acts of 2004 and 2007 were not in vogue. notification was questioned on ground that it should have included other duties also. notification could not have contemplated inclusion of education cess and secondary and higher education cess imposed by Finance Acts of 2004 and 2007 in nature of duty of excise. duty on NCCD, education cess and secondary and higher education cess are in nature of additional excise duty and it would not mean that exemption Notification dated 9-9-2003 covers them particularly when there is no reference to notification issued under Finance Act, 2001. There was no question of granting exemptions related to cess was not in vogue at relevant time posed later on vide Section 91 of 2004 Act and Section 126 of 2007 Act. provisions of 1944 Act and Rules made thereunder shall be applicable to refund, and exemption is only reference to source of power http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 88 / 135 to exempt NCCD, education cess, secondary and higher education cess. notification has to be issued for providing exemption under said source of power. In absence of notification containing exemption to such additional duties in nature of education cess and secondary and higher education cess, they cannot be said to have been exempted. ..... 1. (2019) 19 SCC 801 : 2019 SCC OnLine SC 421, Bajaj Auto Ltd. v. Union of India (held, per incuriam) ..... 3. (2018) 1 SCC 105, SRD Nutrients (P) Ltd. v. CCE (held, per incuriam)" 45. Much reliance was placed by learned counsel for Assessee on judgment of Hon ble Supreme Court in case of Eicher Motors v. Union of India [(1999) 106 ELT 3 (SC)], in which dealing with case of earlier system of Modvat before Cenvat Rules came into force and Rule 57F(4A) of Central Excise Rules, 1944 was questioned before Hon'ble Supreme Court and Supreme Court struck down Rule 57F(4A) of Central Excise Rules as being beyond Rule making powers conferred on Central http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 89 / 135 Government under Section 37 of Central Excise Act, 1944, on ground that right (of Modvat) accrued to Assessee on date when they paid duty on raw materials or inputs and that right would continue until facility available thereto gets worked out or those goods existed. Court held that Section 37 of Act does not enable Government to make Rule 57F(4A) to deny that right to Assessee. Paragraph 6 of said judgment is quoted below for ready reference. "6. We may look at matter from another angle. If on inputs assessee had already paid taxes on basis that when goods are utilised in manufacture of further products as inputs thereto then tax on these goods gets adjusted which are finished subsequently. Thus right accrued to assessee on date when they paid tax on raw materials or inputs and that right would continue until facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of Act does not enable authorities concerned to make rule which is impugned herein and therefore, we may have no hesitation to hold that rule cannot be applied to goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed of for purpose of manufacture of further goods." http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 90 / 135 46. above judgment, with great respect, is not applicable to case before us for two reasons. Firstly, there is nothing like Rule 57F(4A) under challenge before us, nor said judgment of Supreme Court dealt with case of Cess, but was dealing with Modvat credit of Excise Duty itself paid on inputs which was to be utilized against Output Excise Duty on finished goods. That right, obviously so long as Modvat Rules existed, could not be altered as was done in form of Rule 57F(4A) and which was quashed by Hon ble Supreme Court. Here, we are concerned with imposition of Cess under different enactments like Finance Acts which held field for particular period only and even ceased to operate before GST Regime was enforced on 01.07.2017 and question of their transition as input credit in new GST Regime is involved before us. 47. When Cess could not be adjusted even against normal Excise Duty under CENVAT Rules, question of applying ratio of Hon ble Supreme Court judgment in case of Eicher Motors cannot arise. said judgment is therefore distinguishable. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 91 / 135 Moreover, in paragraph 6 of judgment quoted above, one should mark words of Hon ble Supreme Court that "the right accrued would be continued until facility available thereto gets worked out . Obviously, adjustment of CENVAT or unutilised Education Cess or Secondary and Higher Education Cess cannot work out because no Output Education Cess and Secondary and Higher Education Cess Liability existed even prior to 01.07.2017, once levy was dropped by Finance Act, 2015. So, there was no way to work out credit of Education Cess and Secondary and Higher Education Cess even against Excise Duty on finished goods prior to 01.07.2017 much less against GST Output Liability after 01.07.2017. 48. Another case law which was relied upon by learned counsel for Assessee was with regard to words credit taken or availed as distinguished from words utilized for that purpose . learned counsel relied upon decision of Hon ble Supreme Court in case of Union of India v. Ind-Swift Laboratories Ltd. [(2012) 25 STR 184 (SC)]. However, we do not find any need to discuss said judgment in detail because no difference will be made even after Assessee is treated as having taken credit of http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 92 / 135 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, unutilised Education Cess and Secondary and Higher Education Cess could not be cross utilised against usual Excise Duty payable under Excise Act, but could be utilized only against Output Education Cess and Secondary and Higher Education Cess leviable prior to 2015 before being dropped by Finance Act, 2015. 49. Hypothetically, assuming that such Education Cess or Secondary and Higher Education Cess was re-imposed by Central Government in Finance Act, 2016 or 2017 and there was some Output Education Cess or Secondary and Higher Education Cess liability of Assessee, one could understand claim of Assessee of unutilised Input Cenvat in 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 case available before us. Therefore, we have no doubt that Input Cenvat Credit in respect of Education Cess and http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 93 / 135 Secondary and Higher Education Cess to extent of unutilised amount lying in its Electronic Ledger was dead claim and it became infructuous in hands of Assessee. 50. distinction between Cess, Fees, Tax and Duty was elaborately discussed by Constitution Bench of Hon ble Supreme Court in case of Hingir Rampur Coal Limited v. State of Orissa [AIR 1961 SC 459] and we find it useful to quote paragraphs 9 to 13 of said judgment. "9. first question which falls for consideration is whether levy imposed by impugned Act amounts to fee relatable to Entry 23 read with Entry 66 in List II. Before we deal with this question it is necessary to consider difference between concept of tax and that of fee. neat and terse definition of tax which has been given by Latham, C. J., in Matthews v. Chicory Marketing Board (1) is often cited as classic on this subject. "A tax", said Latham, C. J., "is compulsory exaction of money by public authority for public purposes enforceable by law, and is not payment for services rendered". In bringing out essential features of tax this definition also assists in distinguishing tax from fee. It is true that between tax and fee there is http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 94 / 135 no generic difference. Both are compulsory exactions of money by public authorities; but whereas tax is imposed for public purposes and is not, and need not, be supported by any consideration of service rendered in return, fee is levied essentially for services rendered and as such there is element of quid pro quo between person who pays fee and public authority which imposes it. If specific services are rendered to specific area or to specific class of persons or trade or business in any local area, and as condition precedent for said services or in return for them cess is levied against said area or said class of persons or trade or business cess is distinguishable from tax and is described as fee. Tax recovered by public authority invariably goes into consolidated fund which ultimately is utilised for all public purposes, whereas cess levied by way of fee is not intended to be, and does not become, part of consolidated fund. It is earmarked and set apart for purpose of services for which it is levied. There is, however, element of compulsion in imposition of both tax and fee. When Legislature decides to render specific service to any area or to any class of persons, it is not open to said area or to said class of persons to plead that they do not want service and therefore they should be exempted from payment of cess. Though there is element of quid pro quo between tax- payer http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 95 / 135 and public authority there is no option to tax-payer in matter of receiving service determined by public authority. In regard to fees there is, and must always be, co- relation between fee collected and service intended to be rendered. Cases may arise where under guise of levying fee Legislature may attempt to impose tax; and in case of such colourable exercise of legislative power courts would have to scrutinise scheme of levy very carefully and determine whether in fact there is co-relation between service and levy, or whether levy is either not co-related with service or is levied to such excessive extent as to be presence of fee and not fee in reality. In other words, whether or not particular cess levied by statute amounts to fee or tax would always be question of fact to be determined in circumstances of each case. distinction between tax and fee is, however, important, and it is recognised by Constitution. Several Entries in Three Lists empower appropriate Legislatures to levy taxes; but apart from power to levy taxes thus conferred each List specifically refers to power to levy fees in respect of any of matters covered in said List excluding of course fees taken in any Court. 10. question about distinction between tax and fee has been considered by this Court in three decisions in 1954. In Commissioner, Hindu Religious http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 96 / 135 Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt vires of Madras Hindu Religious and Charitable Endowments Act, 1951 (Madras Act XIX of 1951), came to be examined. Amongst sections challenged was Section 76(1). Under this section every religious institution had to pay to Government annual contribution not exceeding 5% of its income for services rendered to it by said Government; and argument was that contribution thus exacted was not fee but tax and as such outside competence of State Legislature. In dealing with this argument Mukherjee, J., as he then was, cited definition of tax given by Latham, C.J., in case of Matthews and has elaborately considered distinction between tax and fee. learned judge examined scheme of Act and observed that "the material fact which negatives theory of fees in present case is that money raised by levy of contribution is not earmarked or specified for defraying expense that Government has to incur in performing services. All collections go to consolidated fund of State and all expenses have to be met not out of those collections but out of general revenues by proper method of appropriation as is done in case of other Government expenses". learned judge no doubt added that said circumstance was not conclusive and pointed out that in fact there was total absence of any http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 97 / 135 co-relation between expenses incurred by Government and amount raised by contribution. That is why Section 76(1) was struck down as ultra vires. 11. same point arose before this Court in respect of 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 Court, upheld validity of Section 49 which imposed liability to pay specified contribution on every Mutt or temple having annual income exceeding Rs. 250 for services rendered by State Government. scheme of impugned Act was examined and it was noticed that collections made under it are not merged in general public revenue and are not appropriated in manner laid down for appropriation of expenses for other public purposes. They go to constitute fund which is contemplated by Section 50 of Act, and this fund to which Provincial Government contributes both by way of loan and grant is specifically set apart for rendering of services involved in carrying out provisions of Act. 12. same view was taken by this Court in regard to s. 58 of Bombay Public Trust Act, 1950 (Act XXIX of 1950) which imposed similar contribution for similar purpose in Ratilal Panachand Gandhi v. State of http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 98 / 135 Bombay. It would thus be seen that tests which have to be applied in determining character of any impugned levy have been laid down by this Court in these three decisions; and it is in light of these tests that we have to consider merits of rival contentions raised before us in present petition. 13. On behalf of petitioners Mr. Amin has relied on three other decisions which may be briefly considered In P.P.Kutti Keya v. State of Madras, Madras High Court was called upon to consider, inter alia, validity of Section 11 of Madras Commercial Crops Markets Act 20 of 1933 and Rules 28(1) and 28(3) framed thereunder. Section 11(1) levied fee on sales of commercial crops within notified area and Section 12 provided that amounts collected by Market Committee shall be constituted into Market Fund which would be utilised for acquiring site for market, constructing building, maintaining market and meeting expenses of Market Committee. argument that these provisions amounted to services rendered to notified area and thus made levy fee and not tax was not accepted by Court. Venkatarama Aiyar, J., took view that funds raised from merchants for construction of market in substance amounted to exaction of tax. Whether or not construction of market amounted to service to http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 99 / 135 notified area it is unnecessary for us to consider. Besides, as we have already pointed out we have now three decisions of this Court which have authoritatively dealt with this matter, and it is in light of said decisions that present question has to be considered." 51. Such distinctions were also studied and highlighted by Division Bench judgment of this Court to which one of us (Vineet Kothari,J) was party in case of Tamil Nadu Minerals Ltd. v. Joint Commissioner of Income Tax [TCA No.1806 of 2008 dt. 22.04.2019, where question involved was whether 'nomination charges' paid by Government Company M/s. Tamil Nadu Minerals Limited to State under Section 8C(7) of Minor Mineral Concession Rules was only "Royalty" and not "Tax, Duty, Cess or Fees" and therefore, delayed payment thereof did not attract Section 43B of Income Tax Act, 1961, so as to disallow same as expenditure under that Act, because Section 43B of Income Tax Act disallowed delayed payment of only "Tax, Duty, Cess or Fees" and not "nomination charges" paid by Mineral Company to State. In said judgment, distinction between these four types of imposts and other related terms were discussed by http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 100 / 135 Division Bench in following manner: "21.A little research into these imposts would be apposite here. These terms have connotations delineated by Apex Court and Authors in following manner: CESS 21.1.Means duty in nature of duty of excise and customs, imposed and collected on motor spirit commonly known as petrol and high speed diesel oil for purposes of this Act, [Section 2(b), Central Road Fund Act, 2000 (India)]. 21.2.Is also tax, but is special kind of tax. Generally tax raises revenue which can be used generally for any purpose by State, Vijayalashmi Rice Mill v. CTO, (2006) 6 SCC 763. 21.3.The term cess is commonly employed to connote tax with purpose or tax allocated to particular thing suggested by name of cess, such as health cess, education cess, road cess etc. This is well settled position of law. However, it also means assessment or levy. Depending on context and purpose of levy, cess may not be tax; it may be fee or fee as well. It is not necessary that services rendered from out of fee collected should be directly in proportion with amount of fee collected. It is equally not necessary that services rendered by fee collected should remain confined to persons from whom fee has been collected. Availability of indirect benefit and http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 101 / 135 general nexus between persons bearing burden of levy of fee and services rendered out of fee collected is enough to uphold validity of fee charged. As per Sinha, J. (dissenting), conceptually fee and tax stand on different footings; whereas element of tax is based on principle of compulsory exaction, concept of fee relates to principle of quid pro quo. validity of tax cannot, therefore, be upheld on ground that same would be fee, State of W.B. v. Kesoram Industries Ltd., (2004) 10 SCC 201. 21.4.The word "cess" is used in Ireland and is still in use in India although word rate has replaced it in England. It means tax and is generally used when levy is for some special administrative expense which name (health cess, education cess, road cess etc.) indicates, Shinde Bros. v. Commr., AIR 1967 SC 1512: (1967) 1 SCR 548. 21.5.Means goods and services tax compensation cess levied under Section 8 of Goods and Services Tax (Compensation to States) Act, 2017, [Section 2(1)(c), Goods and Services Tax (Compensation to States) Act, 2017 (India)]. 22.TAX 22.1. "A tax" is compulsory exaction of money by public authority for public purposes enforceable by law and is not payment "for services rendered". This definition http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 102 / 135 brings out essential characteristics of tax as distinguished from other forms of imposition which, in general sense, are included within it. It is said that essence of taxation is compulsion, that is to say, it is imposed under statutory power without tax payers consent and payment is enforced by law. second characteristic of tax is that it is imposition made for public purpose without reference to any special benefit to be conferred on payer of tax. This is expressed by saying that levy of tax is for purposes of general revenue, which when collected, forms part of public revenues of State. As object of 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 tax payer and public authority. (See Findlay Shirras on Science of Public Finance, Vol. 1). Another feature of taxation is that as it is part of common burden, quantum of imposition upon 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. tax is undoubtedly in nature of compulsory exaction of money by public authority for public purposes, payment of which is enforced by law. But other and equally important characteristic of tax is, that http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 103 / 135 imposition is made for public purpose to meet general expenses of State without reference to any special advantage to be conferred upon payers of tax, Ratilal Panachand Gandhi v. State of Bombay, AIR 1954 SC 388: 1954 SCR 1055: 56 Bom LR 1184. 22.3.An impost; tribute imposed on subject; excise; tallage. general principles of taxation are these: - (1) subjects of every estate ought to contribute to support of Government as nearly as possible in proportion to their respective abilities; that is, in proportion to revenue which they respectively enjoy under protection of State. In observation or neglect of this maxim consists what is called equality or inequality of taxation. (2) tax which each individual is bound to pay ought to be certain and not arbitrary. time of payment, manner of payment, quantity to be paid, ought all to be clear and plain to contributor and to every other person. (3) Every tax ought to be levied at time or in manner, in which it is most likely to be convenient for contributor to pay it. (4) Every tax ought to be so contrived as both to take out and keep out of pockets of people as little as possible over and above what it brings into public treasury of State. Taxes are either direct or indirect. direct tax is one that is demanded from very persons who are intended or desired to pay it. Indirect taxes are those http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 104 / 135 which are demanded from one person, in expectation and intention that he shall indemnify himself at expense of another, such as excise or customs. [Wharton's Law Lexicon.] 23.Tax and Fee 23.1.The distinction between tax and fee lies primarily in fact that tax is levied as part of common burden, while fee is payment for special benefit or privilege. Fees confer special capacity, although special advantage, as for example in case of registration fees for documents or marriage licences, is secondary to primary motive of regulation in public interest, (vide Findlay Shirras on Science of Public Finance, Vol. I). Commr., Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, AIR 1954 SC 282: 1954 SCR 1005: 20 Cut LT 250. 23.2. fee is generally defined to be charge for special service rendered to individuals by some governmental agency, State of Gujarat v. Akhil Gujarat Pravasi V.S. Mahamandal, (2004) 5 SCC 155. 23.3.Taxation includes every charge or burden imposed by sovereign power upon persons, property or property right, for use and support of Government and to enable it to discharge its appropriate functions and in that broad definition there is included proportionate levy upon http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 105 / 135 persons or property and various other methods or devices by which revenue is extracted from persons and property. term "tax" is to be read in all embracing and sweeping sense. Such methods or device used by Government from time to time are not ordinarily open to serious questions but their scope and application vary according to nature of subject under discussion and 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 imposition of any tax or impost, whether general or local or special and "tax" shall be construed accordingly. Though it is not exhaustive definition and only shows what is included in word one is struck immediately by its width of language. Though it speaks of any tax or impost, it goes step further and adds "whether general or local or special", indicating thereby that no special or local considerations are relevant and even general non discriminatory levy must be regarded as taxation. definition of taxation speaks of impost. word "impost" in its general sense means tax or tribute or duty and may be on persons or on goods. In special sense it means duty on imported goods and on merchandise, Sea Customs Act, S. 20(2), In re, AIR 1963 SC 1760, 1784: (1964) 3 SCR 787: (1964) 1 ITJ 671 25.FEES http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 106 / 135 25.1.Is generally defined to be charge for special service rendered to individuals by some governmental agency. amount of fee levied is supposed to be based on expenses incurred by Government in rendering service, though in many cases costs are arbitrarily assessed. Ordinarily, fees are uniform and no account is taken of varying abilities of different recipients to pay. These are undoubtedly some of general characteristics, but as there may be various kinds of fees, it is not possible to formulate definition that would be applicable to all cases, Commr., Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, AIR 1954 SC 282: 1954 SCR 1005: (1954) 1 MLJ 596: 20 Cut LT 250. 25.2.Property peculiar; reward or recompense for services. Also estate of inheritance divided into three species: (1) fee-simple absolute; (2) qualified or base fee; (3) fee-tail, formerly fee conditional.[Wharton's Law Lexicon.] 25.3.Fees are sort of return or consideration for services rendered, which makes it necessary that there should be element of quid pro quo in imposition of fee. There has to be co-relationship between fee levied by authority and services rendered by it to person who is required to pay fee, Govt. of A.P. v. Hindustan Machine Tools Ltd., (1975) 2 SCC 274. 25.4. Perquisites allowed to officers in http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 107 / 135 administration of justice, as recompense for their labour and trouble, ascertained either by Acts of Parliament, by rule or order of Court or by ancient usage.[Wharton's Law Lexicon.] 25.5.Means charges specified by food authority for clearance of imported food consignments, [Regulation 2(j), Food Safety and Standards (Import) Regulations, 2017 (India)]. 26.Levy and Fee 26.1.A levy in nature of fee does not cease to be of that character merely because there is element of compulsion or coerciveness present in it, nor is it postulate of fee that it must have direct relation to actual services rendered by authority to each individual who obtains benefit of service. If with view to provide specific service, levy is imposed by law and expenses for maintaining service are met out of amounts collected there being reasonable relation between levy and expenses incurred for rendering service, levy would be in nature of fee and not in nature of tax. It is true that ordinarily fee is uniform and no account is taken of varying abilities of different recipients. But absence of uniformity is not criterion on which alone it can be said that it is of nature of tax. fee being levy in consideration of rendering service of particular type, correlation between http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 108 / 135 expenditure incurred by Government and levy must undoubtedly exist, but levy will not be regarded as tax merely because of absence of uniformity in its incidence or because of compulsion in collection thereof, nor because some of contributories do not obtain 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 element of "quid pro quo" which is absent in tax. Two elements are thus essential in order that payment may be regarded as fee. In first place, it must be levied in consideration of certain services which individuals accepted either willingly or unwillingly. But this by itself is not enough to make imposition of fee, if payments demanded for rendering of such services are not set apart or specifically appropriated for that purpose but are merged in general revenue of State to be spent for general public purposes, Jagannath Ramanuj Das v. State of Orissa, AIR 1954 SC 400: 1954 SCR 1046. 27.Fee and Tax 27.1.Between tax and fee there is no generic difference. Both are compulsory exactions of money by public authorities; but whereas tax is imposed for public http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 109 / 135 purposes and is not and need not, be supported by any consideration of service rendered in return, fee is levied essentially for services rendered and as such there is element of quid pro quo between person who pays fee and public authority which imposes it. If specific services are rendered to specific area or to specific class of persons or trade or business in any local area and as condition precedent for said services or in return for them cess is levied against said area or said class of persons or trade or business cess is distinguishable from tax and is described as fee. Tax recovered by public authority invariably goes into consolidated fund which ultimately is utilised for all public purposes, whereas cess levied by way of fee is not intended to be and does not become, part of consolidated fund. It is earmarked and set apart for purpose of services for which it is levied. There is, however, element of compulsion in imposition of both tax and fee, Hingir Rampur Coal Co. Ltd. v. State of Orissa, AIR 1961 SC 459, 464: (1961) 2 SCR 537. 27.2.Conceptually fee and tax stand on different footings; whereas element of tax is based on principle of compulsory exaction, concept of fee relates to principle of quid pro quo. validity of tax cannot, therefore, be upheld on ground that same would be fee, State of W.B. v. Kesoram Industries Ltd., (2004) 10 SCC http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 110 / 135 201. 28.LEVY 28.1.Means to realise or to collect. Only necessary condition is that proceedings for realisation of fine must be commenced within stipulated period, Mehtab Singh v. State of U.P., (1979) 4 SCC 597: 1980 SCC (Cri) 142. 28.2.Includes proceedings for assessment, Ashok Singh v. CED, (1992) 3 SCC 169. 28.3.Levy includes not only imposition of charge but also whole process up to raising of demand, Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536. 28.4.The term "levy" is wider in its import than 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 expression of wide import. It includes both imposition of 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 words "levy" and "collect" are not synonymous terms, while "levy" http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 111 / 135 would mean assessment or charging or imposing tax, "collect" would mean physical realisation of tax which is levied or imposed. Collection of tax is normally stage subsequent to levy of same. enforcement of levy could only mean realisation of tax imposed or demanded, Somaiya Organics (India) Ltd. v. State of U.P., (2001) 5 SCC 519. 30.Levy and collection - While expression "levy" may include both process of taxation as well as determination of amount of tax or duty, expression "collection" refers to actual collection of payable duty or tax, as case may be. Since taxable event for attracting excise duty or countervailing duty is manufacture or import of excisable goods into State, charge of incidence of duty stands attracted as soon as taxable event takes place and facility of postponement of collection of duty under Act or rules framed thereunder, can in no way affect incidence of duty on imported goods, S.K. Pattanaik v. State of Orissa, (2000) 1 SCC 413. 31.Levy, Imposition and Assessment term "levy" appears to be wider in its import than term "assessment". It may include both "imposition" of tax as well as assessment. term "imposition" is generally used for levy of tax or duty by legislative provisions http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 112 / 135 indicating subject matter of tax and rates at which it has to be taxed. term "assessment", on other hand, is generally used in this country for actual procedure adopted in fixing liability to pay tax on account of particular goods or property or whatever may be object of tax in particular case and determining its amount, Asstt. Collector of Central Excise, CCE v. National Tobacco Co. of India Ltd., (1972) 2 SCC 560: AIR 1972 SC 2563: (1973) 1 SCR 822: 1973 Tax LR 1607. 32.DUTY 32.1.Means duty of customs leviable under Act, [Section 2(15), Customs Act, 1962 (India)]. 32.2.A tax, impost or imposition; also obligation. [Wharton's Law Lexicon.] 32.3.Duty, direct taxes and indirect taxes - word "duty" means indirect tax imposed on importation or consumption of goods. "Customs" are duties charged upon commodities on their being imported into or exported from country. expression direct taxes includes those assessed upon property, person, business, income, etc., of those who are to pay them, while indirect taxes are levied upon commodities before they reach consumer and are paid by those upon whom they ultimately fall, not as taxes, but as part of market price of commodity, Union of India v. Nitdip Textile Processors (P) Ltd., (2012) 1 SCC 226. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 113 / 135 33.ROYALTY 33.1.It is payment reserved by grantor of patent, lease of mine or similar right and payable proportionately to use made of right by 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 grantor of patent, lease of mine or similar right and payable proportionately to use made of right by grantee", Distt. Council, Jowai Autonomous Distt. v. Dwet Singh Rymbai, (1986) 4 SCC 38. 33.3.Royalty in general connotes State's share in goods upon which rights of its exploitation are conferred upon any person or group of persons. If royalty cannot be claimed by any individual, much less controversial items being its attribute, even if assumed, can be claimed by citizen, State of H.P. v. Raja Mahendra Pal, (1999) 4 SCC 43. 33.4.In transaction of patent, royalty is payment to patentee by agreement on every article made according to his patent or to author by publisher on every copy of his book sold or to owner of mineral for right of working same on every tone or other weight raised, Pradeep C. Mody v. Sashikant C. Mody, AIR 1998 Bom 351. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 114 / 135 33.5.Payment to patentee by agreement on every article made according to his patent; or to author by publisher on every copy of his book sold; or to owner of minerals for right of working same on every ton or other weight raised. [Wharton's Law Lexicon.] 33.6.In its primary and natural sense "royalty", in legal world, is known as equivalent or translation of jura regalia or jura regia. Royal rights and prerogatives of sovereign are covered thereunder. In its secondary sense word "royalty" would signify, as in mining leases, that part of reddendum, variable though, payable in cash or kind, for rights and privileges obtained, Inderjeet Singh Sial v. Karam Chand Thapar, (1995) 6 SCC 166. 34.Royalty and compensation "Royalty" means remuneration paid to author in respect of exploitation of work, usually referring to payment on continuing basis (e.g. 10% of sale price) rather than payment consisting of lump sum in consideration of acquisition of rights. It may also be applied to payment to performers. In context of Act, royalty is genus and compensation is species. Where licence has to be granted, it has to be for period. "compensation" may be paid by way of annuity. "compensation" may be payable on periodical basis, as apart from compensation, other terms and conditions can also be imposed. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 115 / 135 compensation must be directed to be paid with certain other terms and conditions which may be imposed, Entertainment Network (India) Ltd. v. Super Cassette Industries Ltd., (2008) 13 SCC 30." 52. learned counsel for Revenue relied upon decision of Hon ble Supreme Court in case of Union of India v. Uttam Steel Limited [(2015 (13) SCC 209] on issue of claim of Assessee having become dead claim prior to introduction of GST Regime on 01.07.2017 and similarly, Hon ble Supreme Court in aforesaid case held that claim had already became dead, extended period of limitation by way of amendment to Section 11B of Act would not revive such claim. Hon ble Mr.Justice R.F.Nariman speaking on behalf of Bench, said in paragraph 10 that there is no doubt whatsoever that period of limitation being procedural or adjectival law would ordinarily be retrospective in nature, but with one caveat that claim made under amended provision should not itself have been dead claim in sense that it was already time barred before amended Act with larger period of limitation comes into force. Hon ble Supreme Court relied upon earlier decision in this regard in case of S.S. Gadgil v. Lal and http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 116 / 135 Co. [AIR 1965 SC 171] in following manner. "10. We have heard learned counsel for parties and Shri Bagaria, learned Amicus Curiae at some length. There is no doubt whatsoever that 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 claim made under amended provision should not itself have been dead claim in sense that it was time barred before Amending Act with larger period of limitation comes into force. number of judgments of this Court have recognised 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, right to commence proceeding for assessment against assessee as agent of non-resident party under Income Tax Act before it was amended, ended on March 31, 1956. It is true that under amending Act by Section 18 of Finance Act, 1956, authority was conferred upon Income Tax Officer to assess person as agent of foreign party under Section 43 within two years from end of year of assessment. But authority of Income Tax Officer under Act before it was amended by Finance http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 117 / 135 Act of 1956 having already come to end, amending provision will not assist him to commence proceeding even though at date when he issued notice it is within period provided by that amending Act. This will be so, notwithstanding fact that there has been no determinable point of time between expiry of time provided under old Act and commencement of amending Act. legislature has given to Section 18 of Finance Act, 1956, only limited retrospective operation i.e. up to April 1, 1956, only. That provision must be read subject to rule that in absence of express provision or clear implication, legislature does not intend to attribute to amending provision greater retrospectivity than is expressly mentioned, nor to authorise Income Tax Officer to commence proceedings which before new Act came into force had by expiry of period provided, become barred." 53. same Bench of Hon ble Supreme Court in later case of Jayam and Co. v. Assistant Commissioner and Others [(2016) 15 SCC 125] in case under Tamil Nadu Value Added Tax Act, 2006, held that it is trite law that whenever concession is given by statute http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 118 / 135 or notification etc., conditions thereof are to be strictly complied with in order to avail such concession. Thus, it is not right of dealers to get benefit of input tax credit, but it is concession granted by virtue of Section 19 and therefore, conditions for availing such Input Tax Credit have to be fulfilled. Paragraphs 11 to 13 of said judgment authored by Hon ble Mr.Justice A.K.Sikri, are quoted below for ready reference. "11. From Sub-section (10) onwards, provisions are made to follow procedure and fulfill requisite conditions for availing ITC. For purposes of this particular issue, Sub-section (10) is material provision. This provision, which is couched in negative terms, categorically stipulates that such ITC would be admissible to registered dealer and he would not be entitled to claim this credit 'until dealer receives original tax invoice duly filled, signed and issued by registered dealer from where goods are purchased .....'. Further, such original tax invoice should evidence amount of input tax. So much so, even if original tax invoice is lost, obligation cast on registered dealer is to obtain duplicate or carbon copy of such tax invoice from selling dealer and only then input tax is allowed. From aforesaid scheme of Section 19, following http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 119 / 135 significant aspects emerge: (a) ITC is form of concession provided by 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 most important condition is that in order to enable dealer to claim ITC it has to produce original tax invoice, completed in all respect, evidencing amounts of input tax. 12. It is trite law that whenever concession is given by statute or notification etc. conditions thereof are to be strictly complied with in order to avail such concession. Thus, it is not right of 'dealers' to get benefit of ITC but its concession granted by virtue of Section 19. As fortiori, conditions specified in Section 10 must be fulfilled. In that he, we find that Section 10 makes original tax invoice relevant for purpose of claiming tax. Therefore, under scheme of VAT Act, it is not permissible for dealers to argue that price as indicated in tax invoice should not have been taken into consideration but net purchase price after discount is to be basis. If we were dealing with any other aspect de hors issue of ITC as per Section19 of VAT Act, possibly arguments of Mr.Bagaria would have assumed some relevance. But, keeping in view scope http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 120 / 135 of issue, such plea is not admissible having regard to plain language of Sections of VAT Act, read along with other provisions of said Act as referred to above. 13. For same reasons given above, challenge to constitutional validity of Sub-section (20) of Section 19 of VAT Act has to fail. When concession is given by statute, Legislature has power to make provision stating form and manner in which such concession is to be allowed. Sub-section (20) seeks to achieve that. There was no right, inherent or otherwise, vested with dealers to claim benefit of ITC but for Section 19 of VAT Act. That apart, we find that there were valid and cogent reasons for inserting Section 19(20). Main purport was to protect Revenue against clandestine transactions resulting in evasion of tax. ..." 54. We are supported in our aforesaid view by aforesaid two judgments also largely because it is clear that CENVAT credit or Input Tax Credit under GST Regime is concession and facility and not vested right. Even if one were to rank such right of CENVAT credit on pedestal of statutory right, even that right can be curtailed and regulated by conditions for availing such right. It is clear from Scheme of Section 140 of GST Act that transition and carry http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 121 / 135 forward of Input Tax Credit of taxes and duties paid under earlier Indirect Tax Regimes was subject to conditions and specifications given in Section 140 of Act and unless specifically allowed. Such carry forward or set off could not be claimed by any implied intention or so called vested right theory. In our opinion, unutilised Education Cess and Secondary and Higher Education Cess in hands of Assessee had become dead CENVAT Credit claim in year 2015 itself with these levies dropped by Finance Act 2015 and therefore, there is no question of it being claimed as right to be carried forward and set off after 01.07.2017 against Output GST Liability. 55. We may also deal with judgment of Division Bench of Delhi High Court relied upon by Revenue in case of Cellular Operators Association of India v. Union of India [(2018) 14 GSTR 338] decided on 15.07.2018 and also referred by learned counsel for Assessee in support of submission that cross utilization of Education Cess and Secondary and Higher Education Cess towards Excise Duty and Service Tax was never permitted and Delhi High Court repelled challenge of Cellular Operators http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 122 / 135 Association of India to Notification dated 29th October 2015, which was challenged on ground that extended benefit of that Notification was not given to Cellular Operators and credit accumulated on account of Education Cess and Secondary and Higher Education Cess should be allowed to them against payment of Service Tax leviable and payable on digital Communication Services. 56. Distinguishing decision of Hon ble Supreme Court in case of Eicher Motors Limited, as we have also found above, Division Bench of Delhi High Court in judgment authored by Hon ble Justice Sanjiv Khanna (As His Lordship then was), it was held that on holistic reading of entire Scheme, petitioners could not be allowed to take cross utilization against Excise Duty and contention that it was vested right or claim of Assessee could not be accepted. Court also found that decision of Hon ble Supreme Court in case of Eicher Motors, was distinguished by Hon ble Supreme Court itself later on in case of Osram Surya (P) Ltd. v. Commissioner of Central Excise [(2002) 142 ELT 5 (SC)]. "16. decision in case of Eicher Motors Limited and Another (supra) is distinguishable, for in http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 123 / 135 said case, what was subject matter of challenge was Rule 57- F(4-A), which had stipulated that unutilized credit as on 16th March, 1995 lying with manufacturers of tractors under Heading 87.01 or motor vehicles 87.02 and 87.04 or chassis of tractors or motor vehicles under Heading 87.06 shall lapse and shall not be allowed to be utilized for payment of duty on excisable goods. proviso, however, had stipulated that nothing shall apply to credit of duty, if any, in respect of inputs lying in stock or contained in finished products lying in stock as on 16th March, 1995, thereby creating anomalous situation. Credit of tax paid on inputs and even finished products was available, but not in respect of sold products. This was clearly taking away vested right in form of amendment to Rule. There was lapse of credit, which could not be utilized, though tax/duty had not been withdrawn. Supreme Court noticed that credit attributable to inputs had already been used in manufacture of final products that had been cleared, and this alone was sought to be lapsed, notwithstanding fact that right had become absolute. On holistic reading of entire scheme, it was observed that when acts have been done by parties concerned on strength of Rules, incidence following thereto must take place in accordance with scheme or Rules, otherwise it would affect rights of assessees. Further, right had accrued on date when http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 124 / 135 assessee had paid tax on raw materials or inputs and same would continue till facility available thereto got worked out or until goods existed. As noticed above, tax/duty had not been withdrawn. Lastly and more importantly, Section 37 of Central Excise Tariff Act, 1985 did not enable authorities to make Rule impugned therein. legal ratio in Eicher Motors Limited and Another (supra) was followed in Samtel India Limited (supra) wherein amended Rule 57-F(17) of Central Excise Rules, 1944 was challenged. Rules had postulated lapsing of credit in case of manufactured goods falling under sub-heading 8540.12, though 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 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 assessee had claimed credit facility. As noticed above, in present case, credit of EC and SHE could be only allowed against EC and SHE and could not be cross- utilized against excise duty or service tax. In fact, what petitioners seek is amendment of scheme to allow them to take cross utilization of unutilized EC and SHE upon two cesses being withdrawn against excise duty and service tax, though this was not position even earlier. Both EC and SHE were withdrawn and abolished. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 125 / 135 They ceased to be payable. In these circumstances, it is not possible to accept contention that vested right or claim existed and legal issue is covered against respondents by decision in Eicher Motors Limited and Another (supra) and Samtel India Limited (supra). said decisions are distinguishable and inapplicable. 17. decision in Eicher Motors Limited and Another (supra) was distinguished in case of Osram Surya (P) Ltd. Versus Commissioner of Central Excise, Indore, 2002 (142) ELT 5 (SC), wherein proviso to Rule 57 introducing six months time limit for claiming MODVAT credit benefit was challenged. Arguments predicated on vested right being annulled and reduced to nothing were rejected, recording as under - "7. Having heard arguments of parties and after considering Rule in question, we think that by introducing limitation in said proviso to Rule, statute has not taken away any of vested rights which had accrued to manufacturers under Scheme of MODVAT. That vested right continues to be in existence and what is restricted is time within which manufacturer has to enforce that right. appellants, however, contended that imposition of limitation is as good as taking away vested right. In support of their argument, they http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 126 / 135 have placed reliance on judgment of this Court in Eicher Motors Ltd. v. Union of India (1999) 2 SCC 361 wherein this Court had held that right accrued to assessee on date when it paid tax on raw materials or inputs would continue until facility available thereto gets worked out or until those goods existed. In that background, this Court held that by Section 37 of Act, authorities concerned cannot make rule which could take away said right on goods manufactured prior to date specified in rule concerned. In facts of Eicher case (1999) 2 SCC 361 it is seen that by introduction of Rule 57-F(4-A) to Rules, credit which was lying unutilized on 16-3- 1995 with manufacturer was held to have lapsed. Therefore, that was case wherein by introduction of Rule credit which was in account of manufacturer was held not to be available on coming into force of that Rule, by that right to credit itself was taken away, whereas in instant case by introduction of second proviso to Rule 57-G, credit in account of manufacturer was not taken away but only manner and time within which said credit was to be taken or utilized alone was stipulated. It is to be noted at this juncture that substantive right has http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 127 / 135 not been taken away by introduction of proviso to Rule in question but procedural restriction was introduced which, in our opinion, is permissible in law. Therefore, in our opinion, law laid down by this Court in Eicher case (1999) 2 SCC 361 does not apply to facts of these cases. This is also position with regard to judgment of this Court in CCE v. Dai Ichi Karkaria Ltd.(1999) 7 SCC 448." 57. Hon ble Supreme Court in case of Osram Surya held that Second Proviso inserted in Central Excise Rules Rule 57G with effect from 29.06.1995 does not affect substantive or vested right of manufacturer to take credit, but only introduces procedural restriction which is legally permissible by providing time limit of six months. Paragraphs 7 and 8 of said judgment are also quoted below for ready reference. "7. Having heard arguments of parties and after considering Rule in question, we think that by introducing limitation in said proviso to Rule, statute has not taken away any of vested rights which had accrued to manufacturers under Scheme of Modvat. That vested right continues to be in existence and what is restricted is time within which manufacturer http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 128 / 135 has to enforce that right. appellants, however, contended that imposition of limitation is as good as taking away vested right. In support of their argument, they have placed reliance on judgment of this Court in Eicher Motors Ltd. v. Union of India [1999 (106) ELT 3 SC) wherein this Court had held that right accrued to assessee on date when it paid tax on raw-materials or inputs would continue until facility available thereto gets worked out or until those goods existed. In that background, this Court held that by Section 37 of Act, authorities concerned cannot make Rule which could take away said right on goods manufactured prior to date specified in concerned Rule. In facts of Eicher's case (supra), it is seen that by introduction of Rule 57F(4A) to Rules, credit which was lying unutilized on 16.3.1995 with manufacturer was held to have lapsed. Therefore, that was case wherein by introduction of Rule credit which was in account of manufacturer was held not to be available on coming into force of that Rule, by that right to credit itself was taken away, whereas in instant case by introduction of second proviso to Rule 57G, credit in account of manufacturer was not taken away but only manner and time within which said credit was to be taken or utilized alone was stipulated. It is to be noted at this juncture that substantive right has not http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 129 / 135 been taken away by introduction of proviso to Rule in question but procedural restriction was introduced which, in our opinion, is permissible in law. Therefore, in our opinion, law laid down by this Court in Eicher's case (supra) does not apply to facts of these cases. This is also position with regard to 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 appellants that in effect by introduction of this Rule, manufacturer in whose account certain credit existed, would be denied of right to take such credit consequently, as in case of Eicher (supra), manufacturer's vested right is taken away, therefore, Rule in question should be interpreted in such manner that it did not apply to cases where credit in question had accrued prior to date of introduction of this proviso. In our opinion, this argument is not available to appellants because none has questioned legality or validity of Rule in question, therefore, any argument which in effect questions validity of Rule, cannot be permitted to be raised. argument of appellants that there was no time whatsoever given to some of manufacturers to avail credit after introduction of Rule also is based on arbitrariness of Rule, and same http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 130 / 135 also will have to be rejected on ground that there is no challenge to validity of Rule." Likewise before us also, there is no challenge to any provision of CGST Act or Rules made thereunder. 58. We may also briefly add one more reason as to why we cannot subscribe to view taken by learned Single Judge and affirm it. GST Law, by enactment of respective laws by Parliament and States and creation of GST Council to subsume 16 indirect taxes which were in vogue prior to 01.07.2017 was watershed moment in taxation reforms in India. following 16 indirect taxes which were hitherto leviable were subsumed in new GST Law Regime and Constitutional Amendments were effected for that purpose besides enactment of separate laws by Parliament and States to impose GST on sales of goods and services like Central Goods and Services Tax Act, 2017, Integrated Goods and Services Tax Act, 2017, Union Territory Goods and Services Tax Act, 2017, Goods and Services (Compensation to States) Act, 2017, etc. by Parliament and respective State Goods and Services Tax Act by different States and Union Territories. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 131 / 135 (1) Central Excise Duty (2) Additional Excise Duties (3) Excise Duty levied under Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (4) Service Tax (5) Additional Customs Duty commonly known as Countervailing Duty (6) Special Additional Duty of Customs (7) Central Surcharges and Cess, so far as they relate to supply of goods and services. (8) State Value Added Tax/Sales Tax (9) Entertainment Tax (other than tax levied by local bodies) (10) Central Sales Tax (levied by Centre and collected by States) (11) Octroi and Entry Tax (12) Purchase Tax (13) Luxury Tax (14) Taxes on lottery (15) Betting and gambling (16) State cess and surcharges insofar as they relate to supply of goods and services. 59. GST Law spared and did not include within its ambit and scope only six commodities which were left out and continued to be covered by earlier existing laws of Excise Duty and VAT Law and http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 132 / 135 for that purpose, Entry 54 of State List and Entry 84 of Union List were also suitably amended by 101st Constitutional Amendment Act. Six items which are not covered by GST are (a) Petroleum Crude, (b) High Speed Diesel, (c) Motor Spirit (commonly known as Petrol), (d) Natural Gas, (e) Aviation Turbine Fuel and (f) Tobacco and Tobacco products. Except aforesaid 16 taxes and duties specified in different enactments, no other tax or duty were subsumed under new GST Regime with effect from 01.07.2017. 60. Obviously, transition of unutilised Input Tax Credit could be allowed only in respect of taxes and duties which were subsumed in new GST Law. Admittedly, three types of Cess involved before us, namely Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess were not subsumed in new GST Laws, either by Parliament or by States. Therefore, question of transitioning them into GST Regime and giving them credit under against Output GST Liability cannot arise. 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 then existing laws and therefore, such set off cannot be allowed. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 133 / 135 61. For these reasons also, in our opinion, learned Single Judge, with great respects, erred in allowing claim of Assessee under Section 140 of CGST Act. main pitfalls in reasoning given by learned Single Judge are (a) character of levy in form of Cess like Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess was distinct and stand alone levies and their input credit even under Cenvat Rules which were applicable mutatis mutandis did not permit any such cross Input Tax Credit, much less conferred vested right, especially after levy of these Cesses itself was dropped; (b) Explanation 3 to Section 140 could not be applied in restricted manner only to specified Sub-sections of Section 140 of Act mentioned in Explanations 1 and 2 and as tool of interpretation, Explanation 3 would apply to entire Section 140 of Act and since it excluded Cess of any kind for purpose of Section 140 of Act, which is not specified therein, transition, carry forward or adjustment of unutilised Cess of any kind other than specified Cess, viz. National Calamity Contingent Duty (NCCD), against Output GST liability could not arise. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 134 / 135 62. For aforesaid reasons, we are inclined to allow appeal of Revenue and with all due respect for learned Single Judge, set aside judgment of learned Single Judge dated 05.09.2019 and we hold that Assessee was not entitled to carry forward and set off of unutilised Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess against GST Output Liability with reference to Section 140 of CGST Act, 2017. appeal of Revenue is allowed. CMP No.690 of 2020 is closed. Costs easy. 63. We place on record our appreciation for able assistance and well drafted written arguments of learned counsel on both sides. Index : Yes (V.K.J.) (K.R.J.) Internet : Yes 16.10.2020 kpl To 1. Secretary State Tax Department Fort St. George, Chennai 600 009. 2. Chairman GSTN, East Wing, World Mark-1 4th Floor, Tower B, Aerocity Indira Gandhi International Airport, New Delhi 110 037. http://www.judis.nic.in Judgment dt. 16.10.2020 in WA No.53 of 2020 [Asst. Commissioner of CGST & Central Excise v. Sutherland Global Services Private Limited] 135 / 135 DR.VINEET KOTHARI, J, AND KRISHNAN RAMASAMY, J. Judgment in WA No.53 of 2020 16.10.2020 http://www.judis.nic.in Assistant Commissioner of CGST and Central Excise, Chennai / Commissioner CGST and Central Excise, Chennai / Union of India / Central Board of Excise and Customs, New Delhi v. Sutherland Global Services Private Limited / Government of Tamil Nadu / Ch
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