Swachh Bharat Cecc .50 % input credit shoud be elligible, Service Tax

[Swapneswar muduli]

Dear Sir,

As per notification 22/2015 dated-06-11-2015 swath Bharat Cess .5 % would be applicable for all services.

But not clarify regarding the input credit whether this cess is eligible for input credit or not.

My question is that this cess is applicable in case of RCM also ?

If we paid in under RCM is it eligible for input credit or not ?

Is there any special Accounting code for payment this cess to CBES ?

Regards

Swapneswar

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

Rule 3 (1) of Cenvat Credit rules, 2004 lists various duties credit of which can be availed by a manufacturer or output service provider. Swatch Bharat Cess is not added to the list. Therefore you cannot avail credit of the said cess till the credit rules are amended.

[KASTURI SETHI]

Sir,

We can expect amendment in Cenvat Credit Rules and allotment of accounting code for Swach Bharat Cess (SBC) at any time from the Govt.

[MARIAPPAN GOVINDARAJAN]

I hope that Government will allow to take credit by making amendments in the CENVAT Credit Rules, 2004.

[YAGAY AND SUN]

Let the Bharat be Swachh. Therefore, please do not talk about CENVAT credit on this new Levy.

[Ganeshan Kalyani]

1) Yes, this SBC is applicable under RCM also.

2) As of now there is no amendment in CCR, hence CENVAT credit cannot be taken.

3) There is no special accounting code given as of now, but such amendment is expect soon before payment is due in Dec 2015 for liability accruing in Nov 2015 for SBC.

[KASTURI SETHI]

If Govt. allows cenvat credit on SBC, it will not be hurdle in making Bharat Swachh ! I think so. If credit can be allowed on Ed. Cesses, why not on SBC ? It is legal right of an assessee which should be provided by Govt.

[Mahir S]

SB cess along with Service tax shall have to be paid on services under Reverse Charge Mechanism.

[GOKARNESAN.S SUBRAMANIAN]

Even if amendment is made in cenvat credit rules to allow SB cess as credit, the utilisation may be restricted to only service tax on output service and not to excise duty as no SB cess is payable on goods manufactured.

hence, for manufacturer it is a cost only

S.Gokarnesan

Advocate

[JAIPRAKASH RUIA]

There is no reason for restricting the credit as well as utilization of SBC across the board specially when we are heading towards the GST and will deter EASE OF DOING BUSINESS.

When the govt. has decided for revenue neutral rate for GST, every tax should be cenvatable and the rate of GST should be adjusted accordingly. This will be great simplification.

[GOKARNESAN.S SUBRAMANIAN]

I fully agree with your views. However, as on today, taking into credit not allowed on other cesses like 'coal cess, clean energy cess ...', the SB cess also levied for specific purpose, I am of the view that the same treatment may be given for this by Government for not allowing credit. Only Government has to decide the same

gokarnesan

i

[Ganeshan Kalyani]

To further amend the Swachh Bharat Cess Government has published Notification no.23, 24 & 25 / 2015-ST.

Notification No. 23/2015-ST: Swachh Bharat Cess shall be leviable on the value after availing abatement as per Notification no. 26/2012-ST.

Notification No. 24/2015-ST: Swachh Bharat Cess shall also be applicable for the purpose of Reverse charge Notification 30/2012-ST.

Notification No. 25/2015-ST: Swachh Bharat Cess applicability to air travel agent, an insurer carrying on life insurance business, purchase or sale of foreign currency, distributor or selling agent of lottery etc. who are liable to pay service tax at special rate.

thanks

[CS SANJAY MALHOTRA]

Dear,

Please go through the FAQ on Swachh Bharat Cess uploaded at CBEC site under Service Tax. Swachh Bharat Cess is not eligible as Input Tax Credit and has to be paid in Cash only and can't be adjusted from any CENVAT account.

[Ashwani Rustagi]

SBC is not integrated in the Cenvat Credit Chain, therefore, credit for SBC would not be available. This has been clarified by the Govt. in FAQ.

[KASTURI SETHI]

Sh.Ashwani Rustagi Ji,

Thanks a lot for rightly updation.

[ashish chaudhary]

There has been judgment of Karnataka High Court in case of Shree Renuka Sugars Ltd (2014-TIOL-98-HC-KAR-CX)= 2014 (1) TMI 1469 - KARNATAKA HIGH COURT where question had come before HC as to whether credit of sugar cess levied under Sugar Cess Act be allowed considering it in the nature of duty of excise. It has been held by High Court that sugar cess paid is credited to Consolidated Fund of India. Hence, it ceases to be in the nature of cess or fee and partakes the character of duty or a tax. Once it is considered as duty, Cenvat Credit would be eligible even if there is no specific provision in the Cenvat Credit Rules to allow credit for the same.

The rationale may be applied to SBC also as the proceeds of SBC would be first credited to Consolidated Fund of India and appropriation shall be made therefrom.

One could evaluate taking credit relying on above judgment. The same may be availed and reversed under protest each month till judicial clarity emerges.

[Manoj Agarwal]

All the issues raised here has been discussed in my article titled 'All About SBC - FAQ' published on 11/11/2015 i.e. even before the CG issued Notification No. 23, 24 and 25/2015-ST.

The issue regarding availability of cenvat credit is covered at point 12 of the said write-up and in my view, cenvat credit of SBC is available even when it is not expressly covered in Rule 3 of CCR.

[CS SANJAY MALHOTRA]

Dear Mr. Manoj,

CENVAT Credit of SBC is not available as is clarified by CBEC in their FAQ's. Below for info of all and not to face any litigation.

Q.14 Whether Cenvat Credit of the SBC is available?

Ans. SBC is not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax.

[Manoj Agarwal]

Dear CS Sanjay Malhotra,

Have you read Point 12 of the link shared by me??

And what is the legal validity of the FAQ issued by CBEC?

[CS SANJAY MALHOTRA]

Dear Mr. Manoj,

Have gone through ur views also, but above all important is the Provisions contained in the CENVAT Credit Rules, wherein CENVAT Credit has not been allowed as of now for SBC.

Litigation & Judgments thereof are at later stage wherein one can expect anything or CBEC can amend the CENVAT Credit Rules thus allowing the credit of SBC.

regards

[ashish chaudhary]

In my view, one can take the credit relying upon judgment of Shree Renuka Sugars. To be on safer side, do not utilise the credit and reverse it in the same month under PROTEST. This could safeguard one against the time limit of one year in taking the credit in case the matter is decided in favour of assessee by Court in future.

[Manoj Agarwal]

Point No. 12 of my article:-

12. The moot question is whether Cenvat Credit is available on SBC?

Most of the subject experts are of the view that since SBC is not specifically covered under Rule 3 of Cenvat Credit Rule, 2004, cenvat credit is unavailable, unless Rule 3 is amended to this effect. With due respect, the author differs in opinion and is of the view that cenvat credit can be availed on SBC. However, unless the government clarifies the issue and allow cenvat credit, the SAME WOULD BE SUBJECT TO LITIGATION. The issue requires detailed analysis and may be taken up in subsequent write-up.

So, I have already mentioned that taking of cenvat credit would be subject to litigation and it is better if the government clarifies the same or amend Rule 3 to expressly include the same. But I still maintain my view that cenvat credit of SBC can be availed.

[Ganeshan Kalyani]

With due respect to all the replies above it is good to wait for departmental clarification for SBC credit. This is so because in practice an assesse had taken credit of 2% & 1% Education cess lying in books as of 28.03.2015. The department issued notice to reverse the credit along with interest and penalty. Which is why it is always better to be on safer side by waiting for a calificatory notification from department.

[Ganeshan Kalyani]

Sorry 28.03.2015 written wrongly instead of 28.02.2015. Further department had given clarification only for taking credit of inputs received after 28.02.2015 and had not said so far for the credit of 2% & 1% education cess and secondary and higher education cess. Similarly SBC credit taken before clarification may welcome litigation. This is my view.