2018 (2) TMI 1868 - AT - Service Tax

Services rendered to the Developer or Units situated within the SEZ - N/N. 17/2002-S.T., dated 21-11-2002 as well as the N/N. 4/2004-S.T., dated 31-3-2004 - Held that - Initially N/N. 17/2002 was issued. Even though there was a requirement of an authorization to be given by a Committee headed by Chief Commissioner, it has been submitted that such Committee was never set up and hence, there was no opportunity for obtaining such a certificate - the appellant has rendered the CHA service to units within the Special Economic Zone and hence; the services may be considered as having been utilized within the zone. There is no dispute on the fact that such services have been rendered by the appellant to the developer or units which are situated within SEZ and hence denial of the benefit of the two exemption notifications for minor procedural violation is not justified. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Applicability of Service Tax exemption under Notification No. 17/2002 and Notification No. 4/2004 to Customs House Agent services provided in Special Economic Zone (SEZ) without authorization.

Analysis:
The appeal was filed against Order-in-Appeal No. 68/2007 concerning the period 2003-05. The appellant, a Customs House Agent, provided services in Cochin SEZ without paying Service Tax, claiming exemption under Notification No. 17/2002 and Notification No. 4/2004. These notifications required authorization by a Committee headed by the Chief Commissioner for Service Tax exemption. As the appellant lacked this authorization, the Revenue denied the exemption and demanded Service Tax.

For the period 2004-05 under Notification No. 4/2004, the condition of authorization was removed, yet the benefit was denied due to services being consumed within the SEZ. The appellant contested this decision, leading to the current appeal.

During the hearing, the appellant's representative argued that since SEZ units were new during the issuance of Notification No. 17/2002, the authorization system was not in place. This condition was subsequently removed in Notification No. 4/2004. A clarification from the Development Commissioner of Cochin SEZ supported the appellant's position, stating that units in the SEZ, approved by the Development Commissioner, were entitled to Service Tax exemption if services were used within the zone.

The Revenue defended its decision, asserting that all conditions of the notifications were not met. However, upon reviewing the notifications, it was noted that the authorization committee was never established, and the condition was removed in the later notification. The clarification from the Development Commissioner further supported the appellant's claim. As the services were provided within the SEZ to units approved by the Development Commissioner, the Tribunal concluded that denying exemption for a procedural violation was unjustified.

Therefore, the Tribunal set aside the impugned order, allowing the appeal and granting the Service Tax exemption to the appellant for the services provided within the SEZ to the developer or units situated there.