As you aware that w.e.f. 1st June, 2015 service tax rate has been increased from 12.36% to 14% (subsuming Education Cess and Secondary & Higher Education Cees, collectively termed as ‘cess’). In light of rule 3(4) of CENVAT Credit Rules, 2004; this amendment has raised questions regarding fate of cess for service providers, majorly, in following cases:

1. Closing balance of cess as on 31st May, 2015;
2. Cess in respect of inputs and capital goods received in F.Y. 2014-15 but CENVAT Credit is omitted to be availed;
3. Cess in respect of input services, invoice received till 31st May, 2015, but CENVAT Credit is omitted to be availed;
4. Deferred cess of Capital Goods received in F.Y. 2014-15;
5. Cess in respect of Capital Goods received prior to F.Y. 2014-15;
6. Cess in respect of inputs and capital goods received on or after 1st June, 2015; and
7. Cess in respect of input services, invoice received on or after 1st June, 2015.

Recently, Central Government has issued Notification No. 22/2015-CE (NT) dated 29th October, 2015 to provide provisions for utilisation of CENVAT Credit of cess for the purpose of payment of Service Tax in following cases:

• Cess paid on inputs or capital goods received on or after 1st June, 2015;
• Deferred cess in respect of capital goods received in F.Y. 2014-15;
• Cess on input services, invoice received on or after 1st June, 2015

Therefore, though Central Government has allowed to utilise CENVAT Credit of cess in three cases (point no. 4, 6 and 7); fate of cess in respect of point no. 1, 2, 3, and 5 is still full of doubts.