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ITC of EC,SHEC and KKC not lapsed: Madras HC

Facts of the case: Sutherland Global Services Private Limited,

ITC of EC,SHEC and KKC  was not allowed for the transition by CBIC. The petitioner prays for a writ of Certiorari quashing letter dated 14.02.2018 issued by the 1st respondent Assessing Officer. As a consequence thereof the petitioner would be entitled to avail and utilise accumulated credit pertaining to Education Cess (in short ‘EC’), Secondary and Higher Education Cess (in short ‘SHEC’) and Krishi Kalyan Cess (in short KKC’).


Important observations by honourable High court and decision for ITC of EC, SHEC and KKC.

Such credit accumulated has not been stated to have lapsed. The impugned action of the assessing authority in rejecting the claim has however the consequence of the insertion of a Rule/Regulation to this effect, which, in my view, is impermissible. 

It was clearly mentioned by the honourable court that EC, SHEC and KKR cant be said to be lapsed.

47. Thus the Revenue argues that the accumulated credit of EC, SHEC, and KKC is dead and gone and there is nothing that the assessee could claim as having been carried forward. This argument is rejected. At the risk of repetition, accumulated credit cannot be said to have been wiped out unless there is a specific order under which it lapses. Though there may be embargos placed by the Statutes and Rules, such as the embargo against cross –utilization placed by Rule 3(7)(b) of the CCR, the accumulated credit continues in the books of the assessee till specifically wiped out.

It is a big relief of taxpayers having a huge amount of SHEC, EC, and KKC in their ledger. The contention of CBIC that ITC of EC, SHEC, and KKC will lapse and won’t be allowed into GST is rejected. Let us see how the department will react to it. There may be a positive verdict from the Supreme court also.


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Profile photo of CA Shafaly Girdharwal CA Shafaly Girdharwal


New Delhi, India

CA Shaifaly Girdharwal is a GST consultant, Author, Trainer and a famous You tuber. She has taken many seminars on various topics of GST. She is Partner at Ashu Dalmia & Associates and heading the Indirect Tax department. She has authored a book on GST published by Taxmann.

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