2023 (10) TMI 815 - AT - Service Tax

Tribunal Grants Refund of Swachh Bharat and Krishi Kalyan Cess, Treating Them as Service Tax Under Notification 41/2012-ST

The Tribunal set aside the impugned orders and allowed the appeals, granting the appellant a refund of Swachh Bharat Cess (SBC) and Krishi Kalyan Cess ... Rebate/refund claim of SBC & KKC - export of Basic Grade Pig Iron to Rayang/Thailand under cover of Shipping Bill - export of Non-Alloy Pig Iron from Paradeep Port in terms of Notification No.41/2012-ST dated 29.06.2012 - denial on the ground that there is no specific provision in the subject Notification No.41/2012-ST dated 29.06.2012 for granting refund of the said SBC & KKC. HELD THAT:- Notification No.41/2012-ST is clearly stating grant of refund of service tax paid on services used for export of goods and sub-section (2) of section 119 of Finance Act, 2015 and sub-section (2) of section 161 of the Finance Act, 2016 clearly stipulate SBC and KKC as service tax respectively; that sub-section (5) of section 119 of the Finance Act, 2015, and subsection (5) of the section 161 of the Finance Act, 2016 also stipulate that all provisions relates to refund of service tax under Finance Act, 1994 shall be applicable to refund of SBC & KKC. Therefore, the said provisions were not taken into consideration by the authorities below. SBC has been levied as Service Tax only as has been stated to in Section 119(2) of the Finance Act, 2015 and the rate of SBC @ 2% of value of taxable services proposed under the Finance Act, 2015 has been reduced to @ 0.5% of value of taxable services vide Notification issued under Section 93(1) of the Finance Act, 1994 which enables Central Government to grant exemption from Service Tax. Therefore, SBC has been given status of Service Tax levied under the Finance Act, 1994 for the purpose of refund/rebate. Notification No.12/2013-ST dated 01.07.2013 also had specifically provided refund of service tax leviable under Section 66B of the Finance Act, 1994 whereas SBC & KKC have been levied under section 119 of the Act inserted vide Finance Act, 2015 and Section 161 of the Act inserted vide Finance Act, 2016, respectively, hence there was legal requirement to amend NotificationNo.12/2013-ST vide Notification No.2/2016-ST and Notification NO.30/2016-ST dated 26.05.2016 to include SBC & KKC for refund under Notification No.12/2013-ST as SBC & KKC are not leviable under Section 66B of the Finance Act, 1994; whereas Notification No.41/2012-ST dated 29.06.2016 has allowed refund of service tax without specifying whether leviable under Section 66 or Section 66B of the Finance Act, 1994 and hence, no amendment in Notification No.41/2012-ST was/is legally required to be undertaken. The impugned orders set aside - appeal allowed. Issues Involved:1. Entitlement of the appellant to a refund of Swachh Bharat Cess (SBC) and Krishi Kalyan Cess (KKC) under Notification No. 41/2012-ST dated 29.06.2012.Summary:Entitlement to Refund of SBC and KKC:The appellant, a Merchant Exporter, applied for a rebate/refund claim for the export of goods under Notification No. 41/2012-ST dated 29.06.2012. The adjudicating authority sanctioned the refund claim of Service Tax but rejected the claims for SBC and KKC, stating there was no specific provision in the Notification for granting refunds of these cesses.Appellant's Arguments:The appellant argued that SBC and KKC are to be collected as Service Tax and, therefore, should be refunded under the same terms. They cited sections 119 of the Finance Act, 2015, and 161 of the Finance Act, 2016, which stipulate that SBC and KKC are levied as Service Tax, and all provisions relating to refunds under the Finance Act, 1994, should apply to them. They emphasized that the legislative intent was to reduce the tax burden on export goods to make them more competitive internationally.Department's Arguments:The Department relied on the decision of the Hon'ble Apex Court in Unicorn Industries v. Union of India, arguing that different types of duty or cess imposed by different legislation cannot be said to have been exempted when a particular kind of duty is exempted.Tribunal's Findings:The Tribunal noted that Notification No. 41/2012-ST clearly states the grant of refund of Service Tax paid on services used for the export of goods. Sections 119 and 161 of the Finance Acts of 2015 and 2016 respectively, stipulate that SBC and KKC are to be treated as Service Tax, and the provisions for refunds under the Finance Act, 1994, apply to them. The Tribunal found that the authorities below did not consider these provisions.Legal Interpretations:The Tribunal emphasized that SBC and KKC, although termed as cess, have been given the status of Service Tax. The Government of India's policy has consistently been not to export taxes, and denying the refund of SBC and KKC would contradict this policy and the legislative intent.Conclusion:The Tribunal set aside the impugned orders and allowed all the appeals, granting the appellant the refund of SBC and KKC along with Service Tax, as per Notification No. 41/2012-ST dated 29.06.2012.Order Pronounced:The order was pronounced in the open court on 17.10.2023.