Education Cess and the Secondary and Higher Education Cess on other cesses - CBEC Clarifies
BOARD had in Circular No.345/2/2004-TRU (Pt.) dated 10th August, 2004 clarified that the Education Cess chargeable under Section 93(1) of the Finance (No.2) Act, 2004 is to be calculated by taking into account only such duties which are both levied and collected by the Department of Revenue .
Now, it seems there is a doubt as to whether the Education Cess chargeable under Section 93(1) of the Finance (No.2) Act, 2004 and the Secondary and Higher Education Cess chargeable under Section 138(1) of the Finance Act, 2007 should be calculated taking into account the cesses which are collected by the Department of Revenue but levied under an Act which is administered by different departments such as Sugar Cess levied under Sugar Cess Act, 1982, Tea Cess levied under Tea Act, 1953 etc.
This simple issue had been agitated for the last eight years. And now the Board clarifies "A cess levied under an Act which is not administered by Ministry of Finance (Department of Revenue) but only collected by Department of Revenue under the provisions of that Act cannot be treated as a duty which is both levied and collected by the Department of Revenue."
Board reiterates that the Education Cess and the Secondary and Higher Education Cess are not to be calculated on cesses which are levied under Acts administered by Department/Ministries other than Ministry of Finance (Department of Revenue) but are only collected by the Department of Revenue in terms of those Acts .
In spite of the Board's clarification in 2004, in several parts of the country, demands were issued (and routinely confirmed) to include other cesses while calculating education cess. In one case before the Tribunal, the learned departmental representative argued that the Section would override the Board instructions. However the Tribunal set aside the order including paper cess for calculation of education cess. []
And at least one Commissioner took the matter in appeal to the High Court against the Tribunal's order. The High Court emphatically held, " it is apparent that a plain reading by itself would indicate that the sugar cess levied and collected cannot be equated with duty of central excise and therefore, cannot be treated to be part and parcel of the amount on which education cess has to be calculated ." []
After all there is no punishment in the Department for officers flouting the Board instructions with impunity and contempt. Can there be anything more atrocious than a Commissioner telling the High Court that his Board is wrong and he would not follow the directions of the Board?
The Board is helpless against such blatant disobedience - the farthest it can go is "view" seriously and everybody knows that such a view is a big joke.
'Cess on cess' is a small amount, but see how much damage it has caused to our clogged judicial machinery - even the precious time of a High Court was wasted by an overzealous Commissioner who had no respect for his Board. Who is going to pay for all this waste of national wealth?
Even now the Board is only reiterating its earlier circular. Why can't it tell the field to withdraw/concede all the cases at all appellate stages?
CBEC Circular No. 978/02/2014-CX, Dated: January 07, 2014