HC : Disallows cross-utilisation of Education Cesses towards excise duty / service tax payment

HC quashes writ petition of Cellular Operators Association seeking to quash Notification No. 22/2015-CE (NT) as being violative of Articles 14, 19(1)(g), 265 and 300A of Constitution of India, holds that accumulated credit of Education Cess and Secondary & Higher Education Cess post abolition, cannot be cross-utilised for payment of excise duty / service tax; Rejects Association’s reliance on TRU’s explanation dated February 28, 2015 as well as claim of vested right to avail benefit of unutilized credit since EC and SHE were ‘subsumed’ in increased rates of excise duty (from 12% to 12.5%) and service tax (from 12.36% to 14%) w.e.f. March 1, 2015 and June 1, 2015 respectively; Referring to Finance Minister’s speech and explanatory Memorandum to Finance Bill 2015, HC states that no statement or assertion was made that benefit of unutilized EC and SHE credit would be available against excise duty / service tax and use of word ‘subsumed’ could indicate that there would not be an increased tax burden on taxpayers on account of EC and SHE withdrawal; Observes, “Any exercise of increasing taxes and withdrawing a cess or a tax is undertaken keeping in mind several aspects. This can include revenue collection in the form of increased taxes on one hand, and withdrawal or reduction of cess or another tax so as to curtail the adverse impact due to increase. Budgets do, and are, a balancing exercise”; Opines, while it is true that the two Cesses were in nature of taxes and not fee, it would be incorrect and improper to treat them as excise duty or service tax, they were specific Cesses for the objective and purpose so specified; Remarks, “Omission of a provision signifies deletion of that provision and is normally not treated as different from repeal” while stating that repeal / omission in present case was not made retrospectively, but applied prospectively; Elucidates that amendment to CENVAT Credit Rules 2004 incorporating provisos (3) to (8) to Rule 3(7)(b) are in nature of concessions confined to a limited and narrow set of cases where capital goods / inputs / input services were received by the manufacturer /  service provider after March / June 2015; Said provisos are not of general application, as they expand the scope and give benefit of utilization of accumulated EC and SHE against payment of excise duty and service tax, which was not the position prior to such dates, hence, “said classification would not fall foul of vice of discrimination. Article 14 is not offended”; Relies on SC rulings in Hingir-Rampur Coal Co. Ltd. and B.K. Industries, while distinguishing SC ratio in Eicher Motors Ltd : Delhi HC