2013 (12) TMI 438 - AT - Service Tax

Violation of provisions of Rule 6 (3) or Rule 6(3A) - Services provided exempted from payment of Service Tax vide Notification No.4/2004-ST, dt.31.03.2004 - Demand of service tax - Availment of exempted granted to the service provider for the services rendered to a unit in SEZ or a developer of a unit in SEZ - Held that - appellant had provided services to MPSEZ. It is also undisputed that the appellant had discharged the Service Tax liability. On perusal of the retrospective amendment as has been brought in by Finance Act, 2012 by Section 144, we find that the Central Government has categorically stated that if any services are rendered to a unit situated in SEZ, the said services cannot be termed as exempted services - Therefore, impugned order is unsustainable - Decided in favour of assessee.

Summary

Issues:
Interpretation of Rule 6 of CENVAT Credit Rules regarding exemption for services provided to Special Economic Zones (SEZs) and developers of SEZs.

Analysis:
The appeal challenged an Order-in-Original that claimed the appellant provided exempted services to a Special Economic Zone (SEZ) and thus was liable to pay Service Tax. The appellant argued that an amendment to Rule 6 of CENVAT Credit Rules, with retrospective effect, exempts services provided to SEZs or developers of SEZs. The Assistant Commissioner contended that services to the SEZ were exempted based on a previous Tribunal decision. The key issue was whether the services provided to the SEZ were exempted from Service Tax.

Upon reviewing the submissions and the retrospective amendment brought in by the Finance Act, 2012, it was found that services rendered to a unit in an SEZ were not to be considered exempted services. The retrospective amendment clarified that services to a unit in an SEZ were not exempt. The judgment emphasized the importance of this amendment and its impact on the case. The Tribunal concluded that the impugned order was unsustainable based on the retrospective amendment and set it aside, thereby allowing the appeal.

The judgment highlighted the significance of the retrospective amendment to Rule 6 of CENVAT Credit Rules in determining the tax liability for services provided to SEZs. It clarified that services rendered to a unit in an SEZ were not exempted services, contrary to the previous understanding. This case serves as an illustration of the impact of legislative amendments on tax liabilities and the importance of considering such changes in legal proceedings.