Clean Energy Cess leviable even after introduction of GST

Jharkhand High Court held that Clean Energy Cess is leviable even after introduction of GST. Accordingly, demand of Clean Energy Cess upheld.

Facts-

The petitioner is a subsidiary of Coal India Limited and is a Category-I Mini Ratna Company since 2007. Vide the present writ petition, the petitioner has challenged the order passed by respondent no. 3, wherein, the respondent no. 3 has confirmed the demand of Clean Energy Cess amounting to Rs. 470,83,42,400/- u/s. 11(A) of the Central Excise Act, 1944 read with Rule 6(5) of the Clean Environment Cess Rules, 2010 along with interest u/s. 11AA/11AB of the Central Excise Act, 1944 and penalty u/s. 11AC of the Central Excise Act, 1944.

The case of the petitioner is that with the introduction of GST, the levy of clean energy cess was replaced by the GST Compensation Cess under the Goods & Services (Compensation to States) Act, 2017. Accordingly, petitioner has undisputedly paid the GST Compensation Cess on all clearances made post 01.07.2017.

Conclusion-

Held that the Revenue is right is demanding the tax on production which was lying on stock as on the date of amendment and repeal of Clean Energy Cess for the sole reason that the taxable event was production and only the payment was deferred at the time of Removal. We hold that by virtue of Section 83(3) playability is created; and only the payment is deferred to be done in the manner provided in Rule 4 & 6. Accordingly, Issue No.(i) is decided in favour of Revenue.

The present case is an interpretational issue and petitioner was paying GST Compensation Cess with a bona-fide belief that Clean Energy Cess was not payable. Further, the petitioner has been filing regular returns under GST law for all the supplies of coal made after introduction of GST. Petitioner was not filing returns under Clean Energy Cess Rules with a bona fide belief that Clean Energy Cess was not payable. Further, these facts were in the knowledge of the respondents; however, despite said facts being in the knowledge of the respondents, show cause notice was issued almost after two years from the date Clean Energy Cess was repealed. Thus, as aforesaid, since the instant case involves an interpretational issue, therefore in such circumstances, no penalty under Section 11AC can be levied as demand of Cess under the extended period of limitation is unsustainable.

FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT