Judgment Update | Division Bench of Madras High Court stays decision of Single Judge in Sutherland Global Services
Please refer to our NITYA’s Insight | Issue 86 on the Madras High Court’s decision in the case Sutherland Global Services Private Limited v. AC CGST and Central Excise, 2019-VIL-536-MAD (‘Sutherland’) <link to update>.
In Sutherland, a Single Judge Bench of the High Court allowed transition of various cesses (like Education Cess, Krishi Kalyan Cess) to the GST regime under Section 140 of the Central Goods & Services Tax Act, 2017 (‘CGST Act’).
The revenue filed an appeal against Sutherland before the Division Bench of the Madras High Court on the ground that credit of cesses have lapsed and hence, cannot be transitioned under Section 140 of the CGST Act. The Division Bench vide its interim order dated January 24, 2020 has stayed the operation of the Single Judge’s order in Sutherland.
The stay imposed on the decision of Sutherland is certainly a setback for taxpayers who intend to rely on this decision to avail credit of cesses or justify credit already availed. In our view, though the High Court in Sutherland’s case dealt with Section 140(8) of the CGST Act which does not impose any restriction on transition of cenvat credit, it supports availability of credit of cesses under Section 140(1) (Refer to NITYA’s Insight | Issue No. 86). The taxpayers who have already availed credit of cesses, are advised to await the final outcome of the appeal before the Division Bench of the High Court. To avoid any recurring interest exposure, taxpayers can choose to reverse such credit under protest and continue to litigate the issue.
 ACCGST v. Sutherland Global Services Private Limited, 2020-VIL-44-MAD