2015 (1) TMI 685 - AT - Service Tax

Denial of refund claim - services consumed only in SEZ - notification No.15/2009-ST dt. 20.5.2009 - Held that - intention of the Revenue is that if anybody has paid the service tax and same has been consumed by SEZ, he is not entitled for the refund claim. If it is so, a person who has paid service tax but is not entitled to pay the service tax shall not be entitled to take the refund of the same which is not the intention of the legislation. It is only the intention of the Revenue officer - Following decision of Tata Consultancy Services Ltd. Vs. Commr. Of Ex. & S.T. (LTU), Mumbai reported in 2012 (8) TMI 500 - CESTAT, MUMBAI - Commissioner (Appeals) has passed the correct order and sanctioned the refund claim which was entitled to the respondents. - Decided against Revenue.

Summary

Issues:
Appeal against refund claims sanctioned by Commissioner (Appeals) for service tax paid on services consumed only in SEZ.

Analysis:
The Revenue appealed against the order where the Commissioner (Appeals) approved refund claims for service tax paid on services consumed solely in SEZ. The Revenue contended that services wholly consumed within SEZ were exempt from service tax as per notification No.15/2009-ST dated 20.5.2009, implying that refund claims for such tax payments were not permissible post this date. However, the Tribunal examined the issue and noted that the Revenue's stance implied that a person who paid service tax but was not required to do so would not be entitled to a refund, contrary to legislative intent. The Tribunal cited a similar case involving Tata Consultancy Services Ltd., where it was clarified that if services were fully exempt from duty and wholly consumed within SEZ, refund claims could still be granted under relevant notifications. The Tribunal emphasized that the refund procedure applied to services procured from outside, where tax liability had to be discharged first, but for services wholly consumed within SEZ, there was no initial tax liability. Therefore, the Tribunal held that the Commissioner (Appeals) correctly sanctioned the refund claims for the respondents, as they were entitled to them.

The judgment highlighted the importance of distinguishing between services consumed within SEZ and those procured from outside. It clarified that even if service tax liability had been discharged, the appellant could still be eligible for a refund under relevant provisions. The Tribunal emphasized that if the appellant met the refund criteria under Section 11B, the claim could not be denied based on the notification under which it was made. In this case, the services were related to authorized SEZ operations, the refund claim was timely filed, and the appellant had borne the tax burden, meeting the requirements for refund eligibility. Therefore, the Tribunal upheld the Commissioner (Appeals)'s decision to sanction the refund claims for the respondents, dismissing the Revenue's appeal and disposing of the cross-objection accordingly.