Krishi Kalyan Cess
(KKC) at the rate of 0.5% is being imposed on all taxable services with effect
from 01.06.2016 on all taxable services provided or agreed to be provided by
the service provider. The revenue collected from this Cess will be utilised by
the government for improving agricultural sector and for taking initiatives to
promote agricultural activities. However, the complicated provisions enshrined
for this Cess tend to defeat the 'Kalyankari intention' of the government.
It is provided that
only a provider of output service shall be allowed to take cenvat credit of the
Krishi Kalyan Cess on taxable services leviable under section 161 of the
Finance Act, 2016. This has the consequence of raising doubt as regards
availment of cenvat credit of KKC levied on input services received by a
manufacturer cum service provider. Not only this, it is being provided that the
cenvat credit of any duty shall not be utilised for payment of KKC leviable
under section 161 of the Finance Act, 2016. In the opinion of authors, literal interpretation
of the provision leads to conclusion that only a service provider can avail the
cenvat credit of KKC imposed on input services availed by it and the credit so
availed can be utilised for payment of KKC and no other duty.
