After 16 years of the adoption of new economic reforms, a country like India has become able enough in achieving so many milestones. As the time for the upcoming Budget 2008-09 nears to get unfolded, people from various sections of the society await eagerly with lot of hopes and expectations.

Any attempt by me, to delve deep and do a macro-level analysis like a Wall-street economist, on issues like the decline of indirect tax revenue, etc. will appear child-like, as I am just a beginner in indirect taxes. Hence, I take a walk with the shoe of apt size and invite you for a little chat about the Mess, sorry Cess.

I am not here to deny any fact (suppose to be) that, the two per cent Education Cess imposed in the Budget 2004-05, and the one per cent Secondary and Higher Education Cess introduced in 2007-08 budget, were with the avowed  objective of making Indian brains literate.

Not long long ago and not so long ago, when my boss was teaching me the procedure of availing Cenvat Credit of such Cess, I was eagerly about to ask him a question but in a few seconds before shooting it, I realised, if I would have asked that, he would have thought that I am just asking it for the sake of asking. So, I immediately swallowed all those words leaving a long breath.

But in the next fine morning, I was given the show cause notice, alleging that one of our clients had wrongly utilised the credit of Educational Cess for the payment of Secondary and Higher Education Cess and trust me, the allegation in the notice is exactly the crux of my aborted question.

What could be the reason behind or the billion-worth benefit behind the disallowance of the utilisation of credit taken in respect of Educational Cess against the Secondary and Higher Education Cess and vice-versa? To me, this very master procedure remains as nothing but a catalyst promoting mutation in the payment process resulting in technical cancer, wasting priceless time and rule-less papers of both revenue and the assessee.

At any cost, the fact that the collection of Education Cess is to literate the Indian brains is not disputed, but again the practice of levying a particular percentage of Cess for a particular category of education, leaves the public with a serious doubt, whether there will be any Cess for kindergarten and/or tutorial education in the coming budget.

Quitting now, without making an attempt to sort out a solution for this syndrome will create a gesture that, I am writing just for the sake of writing. Solution (one of the) for this issue could be imposing an educational levy, at a particular percentage and the proceeds may be distributed by the Government for different purposes, in different proportions. This will lay a smooth road for the payment and utilisation of Educational Cess without any ambiguity.

A small illustration:

Prevailing procedure -- BED = 16%: EDU.CESS = 2% on BED: SEC.EDU CESS = 1% on BED

Prescribing procedure-- BED = 16%: EDU.CESS = 3% of BED i.e = 16.48%

With the cost of collection at a very minimal rate and most of their officers without much of work today, the North Block can very well set up a separate wing to segregate the (desired) percentage from the collection for the purpose of education, be it primary, pre primary, secondary, higher, and what not, which will serve the nation in two ways - simplifying the payment and utilisation of Cenvat credit of such cess, and also providing work to their rusting force...

This issue may be wished away like a little spark, but the fact is "No fire can be said to be put off, when a spark remains"

Before Parting...

After my graduation in law last year, I have chosen this field and I should confess that I am just a beginner in indirect taxes. Indeed I use to religiously login to Taxindiaonline, every day, which has become a Bible to me to learn the subject. I profoundly thank TIOL for giving me such a wonderful opportunity to start writing and all the netizens for their patience to bear.