Bonai Industrial Company Pvt. Ltd. Vs Commissioner (CESTAT Kolkata)
Summary: CESTAT Kolkata allowed five connected appeals concerning rejection of refunds of Swach Bharat Cess (SBC) and Krishi Kalyan Cess (KKC) paid on input services used for export of goods. The first appeal was filed by Bonai Industrial Company Pvt. Ltd.; the connected appeals involved Rungta Sons Pvt. Ltd., Feegrade & Co. Pvt. Ltd. and another Bonai appeal. The appellants relied on the Bench’s earlier decision in Bonai Industrial Company Limited, Final Order No. 75534-75538/2024 dated 14 March 2024, in Service Tax Appeal No. 75025 of 2019. Their counsel submitted that the issue stood settled in their favour, and the Revenue’s authorised representative conceded that position.
The Tribunal reproduced the earlier Bonai ruling, which had followed MMTC Ltd. That reasoning treated SBC and KKC as service tax for refund purposes under section 119 of the Finance Act, 2015 and section 161 of the Finance Act, 2016. The quoted decision explained that the refund provisions applicable to service tax extended to these cesses and that Notification No. 41/2012-ST, covering taxable services used for export of goods, therefore permitted their refund. It also referred to the policy against exporting taxes and distinguished the amendments expressly extending SBC and KKC refunds under the notifications concerning exports of services and SEZ services. According to the reproduced reasoning, a corresponding amendment to Notification No. 41/2012-ST was unnecessary. Following the earlier Bench decision, the Tribunal set aside the impugned orders and allowed all five appeals with consequential relief, if any, as per law.
Cases Discussed
- Bonai Industrial Company Limited Vs Commissioner of CGST & CX, Rourkela Commissionerate (CESTAT Kolkata); Service Tax Appeal No. 75025 of 2019; Final Order No. 75534-75538/2024; 14/03/2024 — Followed as directly covering the refund issue in favour of the appellants.
- MMTC Ltd. Vs Commissioner of CGST & CX, Bhubaneswar Commissionerate (CESTAT Kolkata); 2023-VIL-1047-CESTAT-KOL-ST; 17/10/2023 — Discussed within the reproduced Bonai decision for the service tax status of SBC and KKC and their refund under Notification No. 41/2012-ST.
Ms. Ritika Kurmy, Advocate for the Appellant (s)
FULL TEXT OF THE CESTAT KOLKATA ORDER
In all these cases, the issue pertains to the rejection of the Refund in respect of the Swach Bharat Cess (SBC) and Krishi Kalyan Cess (KKC) in respect of the Service Tax for the input services provided for export of goods. Since the issue is common, as admitted by both the sides, I had taken up all the appeals together for disposal.
2. The Ld.Counsel appearing on behalf of the Appeals submits that the issue is no more res integra. The same is duly covered in their favour in respect of the one of the Appellants herein, M/s. Bonai Industrial Company Limited. The Ld.Counsel cites the Final Order No.75534-75538/2024 dated 14.03.2024 (Service Tax Appeal No.75025 of 2019).
3. Since the issue already stands decided in favour of the Appellant, she prays that the present Appeal may be allowed.
4. The Ld.AR appearing on behalf of the Revenue fairly concedes that the issue stands decided in favour of the Appellant.
5. On going through the Final Order No.75534-75538/2024 dated 14.03.2024, I find that the Tribunal has held as under :-
“5. It is seen from the decision of this Bench in the case of MMTC Ltd. cited (supra) that the issue is identical. This Bench has held as under:-
“11. Now dealing with the case in hand, we find 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, we find that the said provisions were not taken into consideration by the authorities below.
………………………….
17. We also find that Section 119(1) of the Finance Act, 2015 stipulated that SBC shall be levied from the date as notified by the Central Government and the Central Government issued Notification No.22/2015-ST dated 06.11.2015 under Section 93(1) of the Act and fixed rate of SBC @ 0.5% of the value of taxable services.
18. It is very clear that 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, we are of the considered view that SBC has been given status of Service Tax levied under the Finance Act, 1994 for the purpose of refund/rebate.
19. In view of discussions held above, we also find ample force in the arguments of the Appellant that SBC & KKC though called cess but have been given status of Service Tax as is evident from Section 119(2) & Section 119(5) of the Finance Act, 2015 and Section 16(2) & 161(5) of the Finance Act, 2016 respectively.
20. We find it is settled position that the Government of India has consistently adopted policy not to export taxes. If the contention of the lower adjudicating authority is accepted then refund of SBC & KKC, even if imposed as Service Tax vide Section 119(2) of Finance Act, 2015 and vide Section 161(2) of Finance Act, 2016, shall not be allowed, which will mean that intention of legislation is to export taxes and the stated policy of the Government shall be reversed by such an interpretation. It is settled position of law that any provision of law cannot be interpreted in such a way to make other provisions of law meaningless or to reverse the intention of legislation.
21. We find that Notification No.41/2012-ST dated 29.06.2012 has been issued under Section 93A of the Act which gives Central Government power to grant rebate. The said Notification No.41/2012-ST grants refund of service tax paid on the taxable services used for export of goods by an exporter. Since SBC & KKC, both have been treated as service tax, as discussed above, the rebate of SBC & KKC is allowable under the above Notification.
22. We also find that Notifications No.39/2012-ST dated 20.12.2012 granting refund of service tax paid on services used in providing export of services has been amended vide Notification No.3/2016-ST dated 03.02.2016 and Notification No.29/2016-ST dated 26.05.2016, so as to allow refund of SBC and KKC; similarly, Notification No.12/2013-ST dated 01.07.2013 allowing refund of service tax paid on specified services used in SEZ has also been amended vide Notification No.2/2016-ST dated 03.02.2016 and Notification No.30/2016-ST dated 26.05.2016, so as to allow refund of SBC & KKC, however no such amendment has been made in Notification No.41/2012-ST dated 29.06.2012 because no amendment is required as explained below :-
…………………….
27. In view of the above factual & legal position, we set aside the impugned orders and allow all the Appeals with consequential relief, if any.”
[Emphasis supplied]
6. Following the ratio of the above case law, I allow the appeals with consequential relief, if any, as per law.”
6. Since the issue is squarely covered by the decision of this Bench, following the same, I set aside the impugned orders and allow the Appeals. The Appellants would be eligible for consequential relief, if any, as per law.
(Dictated and pronounced in the open Court.)
