Ca Joginder (39 Points)
26 February 2016
CA Prakash N
(Head - Indirect Tax (GST & FTP))
(373 Points)
Replied 27 February 2016
For service sector, cut off date to consider Edu cess and SHE cess is 01.06.2015 as effective date of exemption for both the cess is 01.06.2015
Edu Cess and SHE Cess Can be used for payment of Service Tax after 01-06-2015 : CBEC issued Notification No.22/2015-Central Excise (N.T.) dated 29-10-2015 to further amend Cenvat Credit Rules, 2004, so as to allow credit of Education Cess and Secondary and Higher Education Cess paid on inputs/input services and capital goods, to be utilized for payment of service tax in specified circumstances.
Therefore,
1. You can not utilise the Cess balance available as on 31.05.2015 for future services as there is no clarification provided by Govt.
Recently in Minutes of Central Excise Tariff Conference held in Chandigarh on 28th and 29th October, 2015 said that " it was Government’s conscious policy decision to withdraw the Education Cess and Secondary & Higher Education Cess. It is a policy decision to not allow utilization of accumulated credit of education cess and secondary and higher education cess after these Cesses have been phased out. As these Cesses have been phased out and no new liability to pay such Cess arises, no vested right can be said to exist in relation to the accumulated credit of the past. The rule and notifications as they exist need to be followed and do not need any amendment. ".
We expect that Govt should clarify in this Budget i.e on 29.02.2016.
2. You can avail and utilise the credit of Cess on or after 01.06.2015.
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