Mahatma Gandhi once said: “I visited the Vishwanath temple last evening. If a stranger dropped from above on to this great temple, would he not be justified in condemning us? Is it right that the lanes of our sacred temples should be as dirty as they are? If even our temples are not models of cleanliness, what can our self-government be? We do not know elementary laws of cleanliness. We spit everywhere. The result is indescribable filth.” Now, considering the fact that India accounts for 60 per cent of the world’s open defecation, the Modi Government launched one of India’s most ambitious civic programmes “Swachh Bharat Abhiyan.” And to this end a new cess “the Swachh Bharat Cess (0.5 per cent)” on all taxable services was levied. This was simply added to the 14.5 per cent service tax rate. For around six months, well publicised sanitation campaigns were taken across the country, but on the ground, the excitement and photo-ops failed to make as much impact as was hoped for.

A cess is a ‘tax on tax’ levied by the government to raise funds for an explicit purpose. It is different from the usual taxes such as income tax, excise duty and customs duty in another respect. All these taxes collected by the government generally go into the Consolidated Fund of India (CFI) which can be disbursed for any legitimate public activity. But the collection from a cess is required to be kept outside of the CFI and to be spent only on the specific purpose for which it was levied.

Constitution of India stipulates the government’s power to raise revenues by imposing cesses. As per Article 270 of the Constitution, cesses imposed by the Parliament for earmarked purposes need not be shared with state governments. The proceeds are retained exclusively with the Union government, which should ideally be used for their stated purpose. Another major feature of cess like surcharges is that the Centre need not share it with states. But regarding all other major taxes they come under the divisible pool and hence they shall be shared with the states with the recommendations of the Finance Commission. Some of the major cesses we have known are education cess, road cess or (fuel cess), infrastructure cess, clean energy cess, Krishi Kalyan cess and Swachh Bharat cess.

The Swachh Bharat Abhiyan stressed on making India defecation free and cleaning of public places by 2019. One of the campaign’s main objectives was to instil behavioural change among people by encouraging the usage of soap and hand wash. The Abhiyan intended to construct roughly 12 crore toilets along with undertaking programmes related to solid and liquid waste management.

Minister of State for Finance Jayant Sinha in a written reply mentioned in the Lok Sabha that the fund collected from Swachh Bharat cess in financial year 2015-16 was Rs 3901.78 crore. The amount utilised in financial year 2015-16 under Swachh Bharat Mission (Gramin) is Rs 2400 crore and under Swachh Bharat Mission (Urban) is Rs 159.2 crore. Total donations received, including interest, for Swachh Bharat Kosh totalled Rs 369.74 crore, of which Rs 359.2 crore were released for construction of toilets. “The fund utilised under Swachh Bharat Mission (Gramin) since October 2, 2014 is Rs 6,411.05 crore, including Rs 185.22 crore spent on print and electronic media," Sinha added.

The Union Cabinet has approved amendments in the Customs and Excise Act relating to abolition of cesses and surcharges on various goods and services to facilitate implementation of GST. The Centre will abolish 16 cesses and surcharges on union excise and service tax as it lays down the path for rolling out Goods and Services Tax (GST) from July. However, the government till now has made no announcement about its plans to financially make up for the cess amount which will no longer be collected once GST rolls out.

apparatus viz. commodes, urinals and flushing cisterns will fall under the 12.5 per cent bracket and hence become costlier. Similarly, a GST of 18 per cent has been proposed on the bio-toilet industry. The tax rate will be higher than what was being charged from manufacturers by the Indian Railways (12.5 per cent). This in essence will make the whole process of toilet building more expensive. Whether the Central Government levies a rebate for purchase of sanitary ware for Swachh Bharat purposes remains to be seen, especially in rural areas from where the government is trying to eradicate open defecation. The effects of GST will be realised once the taxation system is rolled out in full. The abolition of the Swachh Bharat cess, and how the rise in prices of sanitaryware affects toilet building will be realised in some time.

Modi’s exhortation to own the Mahatma’s dream needs more impetus. Not only is the toilet situation bad, but the condition of excreta treatment and disposal is appalling. Lack of capacity of municipalities and district panchayats to undertake this enormous job and ineffective awareness campaigns by them have failed to bring about the desired results. The less than enthusiastic response from the private sector to take up toilet building has added to the government’s distress.

The Sarkaria Commission remarked way back in 1988 that the application of cesses must be for limited duration. CAG reports have brought to light the consistent short transfer of cess funds in many instances including Road Cess. The government has mandated for 30 per cent of corporate social responsibility (CSR) funds to be utilised for Swachh Bharat Abhiyan, and will hope that more private funding is pumped into the programme, which is in its third year and deserves to be successful.

(The writers are, respectively, an Associate Professor of Law at NLU Odisha and a student of commerce at Glocal University. The views expressed are personal)