2023 (12) TMI 1301 - AT - Service Tax

Refund of service tax paid on input services in terms of Notification No 40/2012-ST dated 20.06.2012 - impugned services are found in the approved list of services for the authorized operations of the unit located in SEZ or not - HELD THAT - The issue in respect of applicability of the said condition for considering the application of refund made under the said notification is no longer res-integra and has been adjudged in a series of decisions of CESTAT. Relevant paragraphs from the recent decision of the Allahabad Bench in the case of EXL Services SEZ BPO Solutions Pvt. Ltd. 2023 (9) TMI 196 - CESTAT ALLAHABAD produced where it was held that In the present case revenue has not disputed the receipt of these services by the SEZ Unit hence denial of the refund claim in respect of these three services for the reason that they did not find mention in the list of specified services approved by the SEZ authority cannot be upheld. On the ground for rejection that certain invoices were addressed to some other premises of the Appellant which are outside the SEZ. There are no merits in the said ground. If it can be shown that the services covered by the said invoices were received and consumed by the appellant unit located in SEZ then the CENVAT Credit/ Refund could not have been denied. There are no merits in the impugned orders denying the CENVAT Credit/ Refund claims filed by the party in terms of the Notification No 40/2012-ST and 12/2013-ST on the grounds stated therein. However for determination of the refund claims in light of the above observations matter is to be reconsidered by the original authority. Appeals are allowed and the matter remanded to the original authority for reconsideration of the refund claims.

Summary

Issues Involved:
1. Denial of CENVAT Credit/Refund due to non-approval of services by the Development Commissioner.
2. Refund claims denied for services used at unregistered premises outside SEZ.
3. Non-production of original invoices for claimed services.
4. Procedural requirements versus substantive benefits under SEZ Act.

Summary:

Issue 1: Denial of CENVAT Credit/Refund due to non-approval of services by the Development Commissioner:
The appellant's refund claims were primarily denied because the input services were not approved by the Development Commissioner as required by Notification No. 40/2012-ST and 12/2013-ST. The tribunal referenced multiple precedents, including EXL Services SEZ BPO Solutions Pvt. Ltd. [2023-TIOL-852-CESTAT-ALL], stating that the SEZ Act, 2005, has an overriding effect under Section 51, making procedural approval requirements non-mandatory. The tribunal emphasized that substantive benefits should not be denied for procedural lapses, as supported by cases like Metlife Global Operations Support Center (P) Ltd. [2021 (46) GSTL 418 (T-Del)] and Mast Global Business Services India Pvt. Ltd. [2018-TIOL-3115-CESTAT-BANG].

Issue 2: Refund claims denied for services used at unregistered premises outside SEZ:
The tribunal found that if services were received and consumed by the SEZ unit, the CENVAT Credit/Refund should not be denied even if invoices were addressed to premises outside SEZ. It referenced SRF Ltd. [2022 (64) GSTL 489 (T-Del)], which held that substantive benefits should not be denied based on the address on the invoice if the services were indeed for the SEZ unit.

Issue 3: Non-production of original invoices for claimed services:
The tribunal noted that mere technical discrepancies in invoices should not lead to denial of substantive benefits. It cited Vedanta Ltd. [2021 (44) GSTL 99 (T-Kol)], emphasizing that denial of refund claims on such grounds is unsustainable if the SEZ unit has paid service tax and received the services.

Issue 4: Procedural requirements versus substantive benefits under SEZ Act:
The tribunal reiterated that the SEZ Act provides overriding benefits and exemptions from taxes for units in SEZs. It referenced decisions like SE Forge Ltd. [2019 (365) ELT 560 (T-Chennai)] and ECLERX Service Ltd. [2023 (72) GSTL 99 (T-Mum)], affirming that procedural requirements should not negate substantive benefits granted by the SEZ Act.

Conclusion:
The tribunal allowed the appeals, remanding the matter to the original authority for reconsideration of the refund claims in light of the observations made, directing the finalization of refund claims within three months.