Case Law Details
Alkem Health Science Vs Commissioner of CGST & CX (CESTAT Kolkata)
Introduction: The Central Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata has recently delivered a crucial judgment in the case of Alkem Health Science versus the Commissioner of CGST & CX. This case revolved around the issue of refund claims concerning education cess and higher education cess paid by the appellant, a pharmaceutical manufacturer. The decision carries significant implications for similar cases involving the refund of these cess amounts.
Background: Alkem Health Science, engaged in pharmaceutical manufacturing, availed the benefit of area-based exemption as per Notification no. 20/2007-CE dated 25.04.2007, later amended by Notification no. 38/2008-CE dated 10.06.2008. This exemption allowed them to pay duty in cash after exhausting CENVAT credit.
Refund Claim: Following a Supreme Court judgment in the case of SRD Nutrients, the appellant filed refund claims for education cess and higher education cess paid, along with excise duty, on final products cleared from their factory. The SRD Nutrients decision stated that once excise duty is exempt, no cess is applicable.
Controversy: However, the subsequent Supreme Court ruling in the case of Unicorn Industries contradicted SRD Nutrients and held that manufacturers are not entitled to a refund of education cess and higher education cess. This led to the issuance of show-cause notices by the department for the recovery of the erroneously sanctioned refunds.
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Author Bio
Even though the judgement follows a precedent and is welcome being favourable to tax-payers, it raises a fundamental issue. In the same factual and legal situation there may be three scenarios 1. Refund is issued, 2. Refund is not released and 3. proceedings pending. The results would be different in the three situations without simply because different stage of refund while all the cases are similarly situated. This might be obnoxious and against equality before law. It needs clarification from the apex court.