Refund of SBC and KKC is available on input services used for export of goods.

The appellants sought refunds of Swachh Bharat Cess (SBC) and Krishi Kalyan Cess (KKC) paid on input services used in the export of goods.

The department rejected the refund claims, and the Commissioner (Appeals) upheld the rejections. The appeals were heard together because they raised a common issue. The appellants relied on an earlier Tribunal decision in their favour, and the Revenue fairly conceded that the issue had been decided in the appellants’ favour.

Whether SBC and KKC paid on input services used for export of goods are refundable under Notification No. 41/2012-ST.

Whether the absence of an amendment to Notification No. 41/2012-ST, unlike the amendments to notifications concerning export of services and SEZs, precludes refund of SBC and KKC.

Section 119(2) and (5) of the Finance Act, 2015 treated SBC as service tax and applied the provisions relating to refund of service tax to SBC; similarly, Section 161(2) and (5) of the Finance Act, 2016 did so for KKC.

Notification No. 41/2012-ST, issued under Section 93A of the Finance Act, 1994, provides for refund of service tax paid on taxable services used for export of goods. Following its earlier decision in M/s. Bonai Industrial Company Ltd., Final Order Nos. 75534–75538/2024 dated 14 March 2024—which relied on the Tribunal’s decision in MMTC Ltd.—the Tribunal held that SBC and KKC, having been accorded the status of service tax for refund purposes, are refundable under Notification No. 41/2012-ST; a construction that would deny refund would conflict with the statutory provisions and the principle that taxes should not be exported.

The Tribunal considered the issue covered by its earlier decision in favour of one of the appellants and noted the Revenue’s concession.

Applying the statutory provisions treating SBC and KKC as service tax for refund purposes, it concluded that the refund mechanism in Notification No. 41/2012-ST extended to those cesses when paid on services used to export goods. It also followed the earlier decision’s reasoning that no amendment to Notification No. 41/2012-ST was necessary to permit the refund, notwithstanding amendments made to notifications governing export of services and SEZs.

The Tribunal set aside the impugned orders, and allowed all five appeals. The appellants were held eligible for consequential relief, if any, in accordance with law.