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2015 (2) TMI 614 - AT - Service TaxDenial of refund claim - Notification No. 9/2009-ST dt. 3.3.2009 - Since the services were wholly consumed within the SEZ, the department has ordered recovery of the refund sanctioned by the adjudicating authority - Held that - SEZ Act 2005, under Section 26(i) (e), provides that all services imported into the SEZ to carry on authorized operations in SEZ shall be exempted. Further Section 51 of this Act gives overriding effect over other Acts. This being the legal position, the condition of Notification No. 15/2009 that refund is only admissible to services which are not wholly consumed within the SEZ cannot nullify the overriding provisions of Section 51 of the SEZ Act. The law makes made different schemes, one for granting refund of tax paid on services exported into SEZ and, the other for granting outright exemption to services which are provided to be wholly consumed within the SEZ unit, the recipient is bound to get refund unless assessment at the end of service provider was re-opened and refund was given to the service providers. Notification no. 9/2009 exempts taxable service provided to SEZ units. Once refund is provided for under this Notification, the provisions of statute under Section 11(B) of the Central Excise Act as made applicable to the Finance Act, 1994 comes into play. Therefore, refund cannot be denied under the Act for procedural infraction of having paid the Service Tax which ought not to have been paid by the service provider. The matter already stands decided in the case of Intas Pharma Ltd. vs. Commissioner of Service Tax, Ahmedabad - 2013 (7) TMI 703 - CESTAT AHMEDABAD - Decided in favour of assessee.
Issues:
Recovery of refund sanctioned to SEZ unit under Notification No. 9/2009 due to services consumed wholly within SEZ. Analysis: The appellant appealed against the Commissioner (Appeals) order for recovery of refund of Rs. 1,98,570 sanctioned by the adjudicating authority. The issue arose as the services received by the SEZ unit were wholly consumed within the SEZ, leading to the department ordering the recovery of the refund. The Notification No. 15/2009 amended the exemption scheme, stating that the refund would not apply if services were wholly consumed within the SEZ. The Ld. AR emphasized strict interpretation of notifications to prevent redundancy, citing the case of Collector of Customs, Bombay vs. United Electrical Industries Ltd. 1999 (108) E.L.T. 609 (S.C.). The Tribunal analyzed the relevant notifications, particularly Notification No. 9/2009 and Notification No. 15/2009, which exempt taxable services provided to SEZ units and outline the conditions for refund of service tax paid. The SEZ Act 2005, under Section 26(i) (e), mandates exemption for all services imported into the SEZ for authorized operations, with Section 51 giving overriding effect over other Acts. The Tribunal held that the condition in Notification No. 15/2009 denying refund for services wholly consumed within the SEZ cannot nullify the overriding provisions of the SEZ Act. Refund is admissible unless the assessment at the end of the service provider was reopened and refund was given to them, supported by the Supreme Court decision in Commissioner of Central Excise vs. MDS Switchgear Ltd. - 2008 (229) ELT 485 (SC). The Tribunal further emphasized that once refund is provided under Notification No. 9/2009, the provisions of Section 11(B) of the Central Excise Act come into play, preventing denial of refund for procedural infractions. Citing the case of Intas Pharma Ltd. vs. Commissioner of Service Tax, Ahmedabad - 2013 (32) STR 543 (Tri-Ahmd), the Tribunal established that refund cannot be denied for paying service tax that should not have been paid. The Tribunal rejected the argument that the SEZ unit's management of various units outside SEZ to encash unutilized CENVAT credit violated the legal framework, distinguishing it from the case of Everest Industries Ltd. where refund claims were rejected for different reasons related to CENVAT credit rules. The Tribunal allowed the appeals with consequential relief, if any, pronounced on 07/01/2015.
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