Juhi Bansal
In the first week of February 2015, vide the Notification No. 02/2016-ST dated 02 February 2016 (hereinafter referred to as ‘the recent Notification’), the Central Government has specifically allowed refund of Swatch Bharat Cess (hereinafter referred to as ‘SBC’) paid on specified services on which ab-initio exemption is admissible and not claimed. The said amendment is carried out by adding clause (ba) in sub-paragraph (III) in paragraph 3 of Notification 12/2013-ST dated 01 July 2013, which provides for refund of Service tax on specified services that are not exclusively used for the authorised operations or on which ab-initio exemption is admissible but not claimed.
Apropos the arrival of the recent Notification, a doubt may arise in the industry, if the refund of SBC cannot be taken during the intervening period (i.e., from 15 November 2015 to 02 February 2016).
Legal Backdrop
SEZ units and developers are exempt from Service tax, Education cess and SHE cess on the services received and used for carrying out authorized operations under Notification No 12/2013 – ST dated 01 July 2013 (which is issued under Section 93(1) of Finance Act, 1994). The above Notification provides for exemption to SEZ units / developers, by way of refund of the Service tax paid on the specified services received by them as well as by way of ab initio exemption.
At this juncture, it is noteworthy, that vide the Notification No. 22/2015–ST dated 06 November 2015 (hereinafter referred to as “the earlier Notification”), the Central Government has provided (through proviso) that SBC shall not be leviable on services which are exempt from Service tax by a notification issued under Section 93(1) of Finance Act, 1994.
As an upshot, it is evident that since Notification No. 12/2013 – ST dated 01 July 2013 is issued under Section 93(1) of Finance Act, 1994), thus SBC is not leviable on SEZ units /developers, which are exempt from paying service tax under Notification No. 12/2013 – ST.
Long and short of the above discussion is that at the time of rolling out of SBC (i.e., from 15 November 2015 onwards) itself, the Central Government had intended to grant exemption from SBC to SEZ units /developers (owing to the issue of the earlier Notification).
In this view, can it be inferred that merely, because the said exemption was not specifically laid down in any of the Notifications, Clarifications, FAQ’s etc. issued by the Central Government, in relation to SBC, therefore, the said benefit would not be available to the SEZ units / developers, for the intervening period?
Point of View
In this regard, a view may be taken that vide the recent Notification, the Central Government has only clarified what was not specifically provided during the intervening period, though intended for (through the earlier Notification). For the above reasoning, the assesse may argue before the Departmental authorities that the said benefit has not been given for the first time, since it was already in place by the earlier Notification. Thus, the refund of SBC seems to be admissible during the intervening period (i.e. 15 November 2015 to 02 February 2016).
