Swachh Bharat Cess paid on input services has to be available as Cenvat Credit : CESTAT

Facts of the Case : The common issue involved in these appeal is whether the appellant is entitled for refund of Swatchh Bharat Cess (SBC) paid on the input services used for providing export service Refund claims of the said Cess was rejected by the Adjudicating Authority on the ground that there is no provision for refund of Swatchh Bharat Cess paid on the input services used for providing export service. The learned Commission vide impugned order dated 10/04/2018, rejected the Appeals filed by the Appellant holding that refund of Swatch Bharat Cess paid on the input services used for providing export service is not admissible to the Appellant in the absence of any Notification granting refund of Swatchh Bharat Cess.

Held : 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. It should be earmarked and set apart for the purpose for which it is levied. As per Section 119(4) ibid the proceeds of Swachh Bharat Cess shall first be credited to the Consolidated Fund of India. Swachh Bharat Cess may  be considered as separate levies from the Service Tax but the same legal framework as applied for service tax are to be applied for levy and collection of Swachh Bharat Cess since the provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder are applicable to Swachh Bharat Cess. As  per Section 119(5) of the Finance Act, 2015, rules notified under the Finance Act, 1994, which include Cenvat Credit Rules, 2004 also, shall be applicable for Swachh Bharat Cess as they apply to Service Tax. Therefore, 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. So far as filing of two separate claims are concerned, it is only a procedural lapse and due to the same substantial benefit of refund cannot be denied to the Appellant.

In view of the discussions made hereinabove the issue involved is decided in favour of the Appellant and accordingly the Appeal is allowed with consequential relief, if any.

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