2018 (3) TMI 1595 - AT - Service Tax

Benefit of N///N. 4/2004-ST dated 31.3.2004 - The department was of the view that such exemption is restricted to those services which are consumed within the SEZ. That therefore the appellants are not eligible for the exemption - Held that - The import/export cargo services are provided by the appellant to the SEZ units are definitely consumed by the SEZ Unit. The denial of exemption alleging that these are not consumed entirely within the SEZ unit does not find favor - exemption allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for service tax exemption under Notification No. 4/2004-ST for services provided to SEZ units.

Analysis:

The case involved the appellant, registered to provide services including clearing and forwarding agency service, BAS, etc., availing exemption under Notification No. 4/2004-ST. The department contended that the exemption was limited to services consumed within the SEZ, leading to a demand for service tax, interest, and penalties. The original authority and Commissioner (Appeals) upheld the demand, prompting the appeal.

The appellant argued that services like imports/exports clearance provided to SEZ units were consumed by them, justifying exemption. Referring to Section 66 of the SEZ Act, 2005 and Rule 51, the appellant asserted that the Act's provisions override other laws, emphasizing that the notification should not be narrowly interpreted to deny benefits.

The respondent reiterated the findings in the impugned order, maintaining the denial of exemption.

The Tribunal analyzed the services provided by the appellant, including logistics, steamer agency operations, equipment repair, and container freight station services. It highlighted the process of stuffing cargo into containers for international transportation, either at the exporter's premises or a CFS. Noting that these services were consumed by SEZ units, the Tribunal found the denial of exemption unjustified. Citing Section 26 and Section 51 of the SEZ Act and referring to a precedent, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with any consequential relief.

In conclusion, the Tribunal's decision emphasized that services provided by the appellant to SEZ units, such as import/export cargo handling, were indeed consumed by the SEZ units, warranting eligibility for the service tax exemption under Notification No. 4/2004-ST. The judgment underscored the importance of considering the SEZ Act's provisions and previous legal interpretations in determining exemption eligibility.