On 10th August 2020, the Hon’ble Chief Justice of Tripura High Court Mr. Akhil Kureshi dealt with the WP(C) No.465/2020 and decided to admit the petition on whether overruling a judgment would have any effect on the change in legal relations and transactions that took place while the earlier decision held ground.
Brief Facts of the Case
Petitioner received a show-cause notice dated 03/07/2020 issued by the Assistant Commissioner of Central Goods and Services Tax, to show cause why recovery of the Education, Secondary and Higher Secondary Education Cess refund granted to the Petitioner must not be initiated since the refund was erroneously granted. This notice has been challenged before the High Court.
Laws Involved
In the case of SRD Nutrients Pvt. Ltd vs. Commissioner of Central Excise, the question of law involved was whether the refund of excise duty leviable on goods from certain listed industrially backward areas extends to the Education and Higher Education cess which is imposed as a surcharge on the excise duty. The court held that education cess is on excise duty which means that those assesses who are required to pay excise duty have to shell out Education Cess as well. It can, therefore, be implied that when there is no excise duty payable, as it is exempted, there would not be any education cess at all.
However, this position of law was revisited in Unicorn Industries vs. Union of India and Ors and held that an additional duty can always be determined and merely exemption granted in respect of particular excise duty cannot come in the way of determination of yet another duty-based thereupon. When a particular type of duty id exempted, other types of duty or cess imposed by different legislation for a different purpose cannot be said to have been exempted. It also held that the SRD Nutrients case was decided per incuriam.
Arguments Advanced
The Petitioners argued that the refund was granted by the authorities following the law laid down by the Supreme Court in SRD Nutrients Private Limited vs. Commissioner of Central Excise, Guwahati. This decision has been overruled by the subsequent judgment Unicorn Industries vs. Union of India and others. However since the refund was granted by the Adjudicating Authority under the law in force at the time of the grant which is the SRD Nutrients Private Limited case, any subsequent change in the law cannot make the earlier refund erroneous. He further submitted that the grievance could have been brought by an appeal to the appellate commissioner.
Court’s Observations and Decision
The Court held that the contentions and issues raised by the Petitioner do require consideration and a prima facie case has been made out. The submissions concern with and go to the root of the jurisdiction of the authority in issuing show-cause notice. The Court, therefore, provided an ad-interim relief to the Petitioner by instructing the Authority to not proceed with the hearing of the impugned show cause notice.
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