2013 (12) TMI 862 - AT - Service Tax

Refund Claim of Service Tax paid on services consumed within the SEZ and services which were used in the authorized operations of the SEZ units - partial denial on ground of absence of nexus and non-application of Notification No. 09/2009-ST - Held that - Approval Committee, examined this issue and had issued a specific certificate indicating the various services received by the appellant and justification for use of such services in relation to authorized operations. Once the Approval Committee has given the nexus and the justification, rejection by the lower authorities of the refund claims of the service tax paid on various services on this ground is bad in law and is accordingly set aside. In the case of services which are wholly consumed within the SEZ, there is no necessity to discharge the service tax liability ab initio. That does not mean that in a case where service tax liability has been discharged, the appellant is not eligible or not entitled for refund of the service tax paid under the provisions of Section 11B of the Central Excise Act, 1944 r.w.s. 83 of the Finance Act, 1994. If the appellant is eligible for refund u/s 11B, then the same cannot be denied on the ground that the claim was made under Notification No. 09/2009-ST - Following decision of TATA CONSULTANCY SERVICES LTD Versus COMMISSIONER OF CENTRAL EXCISE & ST (LTU), MUMBAI 2012 (8) TMI 500 - CESTAT, MUMBAI - Matter remanded back - Decided in favor of assessee.

Summary

Issues:
Refund claims under Notification 09/2009 for service tax paid on services used in SEZ territory; Rejection of refund claims by original authority and Commissioner (A); Eligibility for refund under Notification No. 9/2009-S.T.; Rejection of refund under various heads like clearing charges, factory upkeep, telephone charges, bus hire charges, staff welfare charges, professional charges, and security charges; Lack of break up in refund claims; Need for verification of invoices and nexus of service to authorized operation.

Analysis:

Refund Claims under Notification 09/2009:
The appellants, engaged in manufacturing Turbo Chargers in SEZ Pithampur, filed refund claims under Notification 09/2009 for service tax paid on services used in SEZ territory. The original authority and Commissioner (A) rejected these claims, leading to the present appeal.

Eligibility for Refund under Notification No. 9/2009-S.T.:
The issue revolved around the applicability of the refund procedure under Notification No. 9/2009-S.T. post its amendment by Notification 15/2009. The Tribunal clarified that services wholly consumed within the SEZ are exempt from service tax liability, and if service tax has been paid, refund under Section 11B of the Act is permissible, irrespective of the claim being made under the said Notification.

Rejection of Refund under Various Heads:
The original authority rejected the refund claims under different heads such as clearing charges, factory upkeep, telephone charges, bus hire charges, staff welfare charges, professional charges, and security charges. Reasons for rejection included lack of proper documentation, non-submission of invoices, absence of PAN-based service tax registration number, and failure to establish the nexus of services to authorized SEZ operations.

Lack of Breakup in Refund Claims and Verification of Invoices:
The Tribunal noted the absence of a break-up in the refund claims, making it challenging to discern the rejections based on services wholly consumed in SEZ. Additionally, the rejection was also due to the lack of verification of invoices and the failure to establish the connection of services to authorized SEZ operations.

Remand for Re-Examination:
In light of the Tribunal's decision and the deficiencies noted, the Tribunal remanded the case back to the original authority. The appellants were directed to provide detailed evidence for the services claimed, substantiating their use in authorized SEZ operations. The original authority was instructed to re-examine the claim and pass a fresh order after providing an opportunity for the appellants to be heard.

Conclusion:
The appeals were disposed of by way of remand, emphasizing the need for a thorough re-examination of the refund claims in alignment with the Tribunal's decision and the requirements for substantiating the use of services in authorized SEZ operations.