2019 (5) TMI 1568 - AT - Service Tax

Refund of Swachh Bharat Cess (SBC) - input services used for providing export services - HELD THAT - Swachh Bharat Cess is levied and collected for the purpose of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto but in the nature of Service Tax. That Service tax in the form of cess shall be in addition to any cess or service tax leviable on the taxable services under Chapter V of the Finance Act, 1994. In the same way from time to time issues were raised qua Education Cess, Secondary and Higher Education Cess and, Sugar Cess, Automobile Cess etc. which have also been imposed under different statutes and from time to time, as to whether they are in the nature of cess or tax /duty and ultimately those issues were got settled in favour of assessee either Hon ble Supreme Court or by the Hon ble High Court and those were held to be tax/duty. A tax recovered by the government goes into the Consolidated Fund of India which is utilised for all public purposes and no money out of the Consolidated Fund of India shall be appropriated except in accordance with law and for the purposes and in the manner provided in the Constitution. Whereas a cess or fee does not become part of the Consolidated fund and are earmarked for the purpose of services for which it is levied. A Cess can never become part of the Consolidated Fund - Swachh Bharat Cess paid on input services has to be available as Cenvat Credit and the same can be discharged by utilising Cenvat Credit and the appellant is therefore entitle for the refund of it. Filing of two separate claims - HELD THAT - It is only a procedural lapse and substantial benefit of refund cannot be denied to the Appellant on this ground. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Entitlement for the refund of Swachh Bharat Cess (SBC) paid on input services used for providing export services.

Analysis:
1. The appellant filed refund claims for accumulated Cenvat credit and Swachh Bharat Cess (SBC) for the period from July 2016 to September 2016. A show cause notice was issued questioning the refund claim of SBC, stating it is an additional cess over service tax and not integrated in the Cenvat chain. The adjudicating authority and the Commissioner rejected the refund claim of SBC.

2. The appellant argued that since SBC refund is allowed to SEZ units, it should also be allowed for non-SEZ units like STPI units engaged in export services. Referring to Section 119 of the Finance Act, 2015, the appellant contended that SBC is akin to service tax, making provisions for service tax refunds applicable to SBC as well. Legal precedents were cited to support the argument.

3. The judgment delved into the nature of SBC, distinguishing between a tax, fee, and cess. Previous legal cases were cited where courts ruled in favor of the assessee regarding similar levies, such as sugar cess and clean energy cess. The judgment highlighted that SBC proceeds are first credited to the Consolidated Fund of India, but it does not become part of the fund, earmarked for specific purposes.

4. The judgment emphasized that the legal framework for service tax applies to SBC, allowing for the availment of Cenvat Credit on SBC paid for input services. It dismissed the procedural lapse of filing two separate claims as insignificant, ensuring the appellant's entitlement to the refund. Ultimately, the issue was decided in favor of the appellant, allowing the appeal with any consequential relief.

This detailed analysis of the judgment showcases the legal intricacies involved in determining the entitlement for the refund of Swachh Bharat Cess paid on input services used for providing export services.