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Hind Energy And Coal Benefication (India) Ltd. v. Union Of India & Anr.
Factual and Procedural Background
This opinion arises from a petition challenging the validity of the Goods and Services Tax (Compensation to States) Act, 2017. The petitioner has already paid the Clean Energy Cess under Chapter VII of the Finance Act, 2010 on coal stock lying as of 30th June 2017, amounting to approximately 2,85,418 tonnes with cess paid to the extent of Rs. 11.41 crores. The petition seeks relief regarding any additional levy under the impugned legislation on this stock. Procedurally, notices have been accepted by counsel for the respondents, counter affidavits and rejoinders are to be filed, and the matter is listed for further hearing.
Legal Issues Presented
- Whether the petitioner is liable to pay additional compensation cess under the Goods and Services Tax (Compensation to States) Act, 2017 on coal stock on which Clean Energy Cess has already been paid under the Finance Act, 2010.
- Whether the petitioner is entitled to relief from making further payment of the compensation cess during the pendency of the petition, particularly with respect to stock on which cess was already paid.
- The procedural modalities for verification and credit adjustment of cess already paid under the Finance Act, 2010 against any liability under the impugned Act.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court recognized that the petitioner had already discharged Clean Energy Cess liability under the Finance Act, 2010 on certain coal stock. It reasoned that requiring payment of additional compensation cess on the same stock under the impugned Act during the pendency of the petition would be unjust. Therefore, the Court ordered that no further payment be made on such stock until final determination. For coal stock on which no prior cess was paid, payments under the impugned Act would be subject to the petition’s outcome.
To operationalize this interim relief, the Court directed departmental officers to verify the petitioner’s proof of prior cess payment. Upon satisfactory proof, credit would be given, and no further payment would be demanded on such stock. The Court also clarified that if proof was not furnished for certain stocks, the petitioner must pay the cess under the impugned Act, subject to the Court’s directions.
The Court further noted ongoing efforts by the Central Board of Excise and Customs (CBEC) to devise a method enabling credit utilization of previously paid cess in electronic tax returns. Pending such a mechanism, the Court restrained coercive action against the petitioner for delayed filing of returns or non-utilization of credit. The petitioner was directed to continue paying taxes due after availing credit, subject to final orders.
Holding and Implications
Interim relief granted restraining the petitioner from making additional compensation cess payments under the impugned Act on coal stock for which Clean Energy Cess has already been paid under the Finance Act, 2010, during the pendency of the petition.
The direct effect of this order is that the petitioner is protected from double payment of cess on the same coal stock until the Court finally decides on the validity of the impugned legislation. The order also provides a procedural framework for verification and credit adjustment by departmental officers. No new precedent is established beyond the interim relief and procedural directions granted.
[Order]. - C.M. No. 32855/2017 (Exemptions) : Allowed subject to all just exceptions.
W.P. (C) No. 7965/2017
2. The issues raised in this petition, which involves a challenge to the validity of the Goods and Services Tax (Compensation to States) Act, 2017 (‘Act’), are more or less similar to those raised in W.P. (C) No. 7459/2017 (Mohit Minerals Pvt. Ltd. v. Union of India) [ (Del.)].
3. Notice. Ms. Shiva Lakshmi, the learned CGSC, accepts notice for Respondent No. 1 and Mr. Satyakam, the learned ASC, accepts notice for Respondent No. 2. Counter affidavit be filed within four weeks. Rejoinder thereto be filed before the next date of hearing.
4. List on 26th October, 2017.
C.M. No. 32854/2017 (interim relief)
5. In the present case, it is stated that the Petitioner has already paid the Clean Energy Cess under Chapter VII of the Finance Act, 2010 (‘FA 2010’) on the coal lying in stock on 30th June, 2017. Such stock is stated to be around 2,85,418 tonnes, on which the cess already paid is to an extent of Rs. 11.41 crores.
6. In that view of the matter, with regards to the additional levy in terms of the impugned legislation on the aforementioned stock of coal on which the Petitioner has already paid the Clean Energy Cess, the Petitioner should not be required to make any further payment during the pendency of the present petition. However, as far as the stocks of coal on which no Clean Energy Cess was paid, any payment made in terms of the impugned legislation would be subject to the result of this petition. It is ordered accordingly.
7. It is made clear that, in the event of the Petitioner succeeding in the present petition, the Petitioner shall be entitled to a refund of the amount of compensation cess paid under the impugned legislation on such terms as the Court may determine in the final order.
8. To facilitate the implementation of this interim order, it is necessary for the officers of the concerned Department, charged with the responsibility of levying and collecting Clean Energy Cess on coal to depute a team to the Petitioner’s business premises to verify on how much of the stock of coal Clean Energy Cess under the FA, 2010 already stands paid. Subject to the Petitioner furnishing to the satisfaction of the officers proof of such payment, the Petitioner will be given credit for such payment and will not be required to make any further payment under the impugned Act for effecting sales and clearances. Till such time the said exercise is completed, no coercive steps will be taken against the Petitioner to recover the levy under the impugned Act.
9. It is made clear however, that on those stocks for which the Petitioner is not able to produce a satisfactory proof of already having paid the Clean Energy Cess under the FA, 2010, the Petitioner will be required to pay the cess under the impugned Act. This would be subject to the directions issued hereinbefore.
10. In a separate order passed today by this Court in C.M. No. 32866/2017 in W.P. (C) No. 7459/2017 [ (Del.)] it was noticed that the CBEC is in the process of evolving an appropriate method for implementing the interim order dated 25th August, 2017 passed in that case which permitted the Petitioner there to avail and utilise the credit of the cess already paid while paying taxes. At the instance of that Petitioner who explained the difficulties faced in utilising such credit and reflecting it in the electronic returns, this Court has issued certain further interim directions.
11. On the same lines it is directed that the Petitioner here will continue to pay the taxes as and when they fall due after availing and utilizing the credit for the cess already paid. This will, however, be subject to the final orders passed by this Court. As regards to the non-filing of returns by the Petitioner on the due dates, till such time an appropriate method/system is evolved by the Respondent which would facilitate utilization of the credit and provide for it in the returns filed electronically, the Respondents will not take any coercive steps against the Petitioner for the failure to file such electronic returns on time.
12. List on 25th September, 2017.
13. Order dasti under the signature of the Court Master.
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