2016 (2) TMI 941 - AT - Service Tax

Rejection of Rebate claim - service tax paid on services rendered in SEZ - whether the rejection of claim on the ground that the services were not exported and used outside India and payment for such services is received in convertible foreign exchange is justified? - whether rebate can be claimed on service tax paid and not claimed only in respect of the central excise duty paid - the decision in the case of SUJANA METAL PRODUCTS LTD. Versus COMMISSIONER OF C. EX., HYDERABAD 2011 (9) TMI 724 - CESTAT, BANGALORE relied upon - Held that - The said law squarely applies in the case in hand as the issue is similar, where it was held that after coming into force of SEZ Act, supplies made by DTA units to SEZ units are to be treated as export and entitled to benefits as such. Since there is no dispute that the services were rendered to the units in SEZ area, the impugned order has correctly followed the law and sanctioned the rebate claim - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against rejection of rebate claim for service tax paid on services rendered to SEZ units
- Interpretation of Export of Service Rules, 2005 regarding eligibility for rebate
- Dispute over whether rebate can be claimed on service tax paid for services to SEZ units

Analysis:
1. The appeal was filed by the revenue against the order setting aside the rejection of a rebate claim for service tax paid on services provided to units in SEZ. The department filed the appeal before the amendment of the Finance Act provisions, which previously required such appeals to be made to the Joint Secretary, Government of India in cases of rebate claims.

2. The respondent had filed a rebate claim for service tax paid on taxable services provided to customers in SEZ. The adjudicating authority rejected the claim stating that the services were not exported and used outside India, and payment was received in convertible foreign exchange. The first appellate authority highlighted that the services were taxable, tax was paid and collected, and the Export of Service Rules, 2005 were applicable.

3. The first appellate authority noted that the Export of Service Rules, 2005 allowed for the export of taxable services without payment of service tax. It was emphasized that the SEZ was excluded from the term 'India,' making the appellant eligible for rebate subject to specific conditions, including the production of necessary certificates from the service recipient and jurisdictional authorities.

4. The revenue contended that rebate could only be claimed on central excise duty paid, not on service tax. However, the appellate tribunal upheld the first appellate authority's decision, citing a previous judgment that supplies from DTA units to SEZ units are to be treated as exports and entitled to benefits. Since the services were rendered to SEZ units, the tribunal found the impugned order to be legally sound and rejected the revenue's appeal.

5. In conclusion, the tribunal found no merit in the revenue's appeal, affirming the correctness and legality of the impugned order regarding the rebate claim for service tax paid on services provided to SEZ units. The decision was based on the interpretation of relevant rules and previous legal precedents, leading to the rejection of the revenue's appeal.