Refund of Swachh Bharat Cess to exporter of services
This is to apprise you about a recent judgement of Mumbai CESTAT in case of State Street Syntel Services Private Limited v. CCE 2019-TIOL-1468-CESTAT-MUM. The Tribunal was dealing with the issue of eligibility of refund of Swachh Bharat Cess (‘SBC’) incurred on input services by an exporter of services.
The department was denying credit to the assessee on the ground that while Rule 5 of the Cenvat Credit Rules, 2004 (‘Credit Rules’) only allow refund of service tax but does not encompass refund of SBC.
The Tribunal relied upon the decision of Karnataka High Court in the case of CCE v. Shree Renuka Sugars Ltd., 2014 (302) ELT 33 (Kar.) wherein it was held that sugar cess is a duty of excise and eligible for cenvat credit. Similarly, in the case of TVS Motors Co. Ltd. v. UOI, 2015 (323) ELT 57 (Kar.), the High Court held that Automobile Cess is a duty of excise and is eligible for refund to an exporter of goods.
The Tribunal referring to Section 119 of the Finance Act, 2015, observed that SBC was levied as a service tax and hence, eligible for refund.
It is pertinent to note that the taxpayer did not file the refund claim under Notification No.39/2012-ST dated June 20, 2012 (‘Rebate Notification’) wherein rebate of SBC was specifically allowed to the exporter of service. On the other hand, the refund was filed under Rule 5 of the Credit Rules. In our view, the aforesaid rulings in the case of Shree Renuka Sugars and TVS Motors (supra) do not lay the correct position in law. Having said that, the Supreme Court in recent decisions have allowed exemption for education cess and NCCD where the Notification only exempted basic excise duty. Hence, these High Court decisions are also expected to be upheld by the Supreme Court.
It is important to note that Rule 6A of the Service Tax Rules, 1994 (‘ST Rules’) or Rebate Notification do not provide for any time limit for filing refund claim. In the context of Rule 18 of the Central Excise Rules, 2002, the High Courts have consistently held that where no time limit has been prescribed for filing rebate, time limit prescribed for other refunds (under Section 11B of the Central Excise Act, 1944) cannot be applied. Thus, in the absence of any time limitation either in Rule 6A of the ST Rules or the Rebate Notification, an exporter of services can file for refund of SBC even today.