2024 (3) TMI 1325 - AT - Service Tax

Refund of Service Tax paid by the appellant for taxable services used in relation to authorized operations of the SEZ - denial on the ground of limitation - N/N. 09/2009-S.T. dated 03.03.2009 - HELD THAT - The refund was rejected only on the ground of limitation as prescribed in paragraph 2(f) of Notification No. 09/2009-S.T. It is observed that there is no dispute regarding the payment of Service Tax or utilization of services for authorized operations in the SEZ. The refund has been rejected only on the ground that the claim has not been filed within the time limit prescribed in the notification. Thus, the issue to be decided here is whether the time limit prescribed under the notification is applicable in respect of the refund application filed by a unit located within the SEZ area. In the view of Section 26(1) of the SEZ Act read with Rule 31 of the SEZ Rules, it is observed that the conditions of Notification No. 09/2009-S.T. are clearly repugnant and inapplicable. This is because Section 51 of the SEZ Act grants overriding power to the provisions of the SEZ Act. The appellant also contended that in terms of Notification No. 09/2009-S.T. exemption is granted by way of refund of Service Tax in situations where services are not wholly consumed in the SEZ. Whereas for the services which are wholly consumed in SEZ, the appellant need not pay service tax at all because the assessee is eligible for outright unconditional exemption for the services wholly consumed in the SEZ. This change was brought about by Notification No. 15/2009-S.T. dated 20.05.2009. If Service Tax is paid with respect of services which are wholly consumed within the SEZ, it would be the case of Service Tax wrongly paid, as no service tax is otherwise payable. In that case the refund claim of the assessee would not be covered by Notification No. 09/2009-S.T., but rather it would be covered under Section 83 of the Finance Act read with Section 11B of the Central Excise Act, 1944. In such a case the time period for filing the refund claim is one year and the appellant has filed the refund claim within this period of one year. Accordingly, the refund claim can be considered to be filed within the prescribed time-limit. The impugned order rejecting the refund claim on the ground of limitation, is not sustainable - the impugned order set aside - appeal allowed.

Summary

Issues Involved:
1. Denial of refund of Service Tax on the ground of limitation.
2. Applicability of SEZ Act over other legislations regarding Service Tax exemptions.
3. Procedural requirements for claiming Service Tax refunds.

Summary:

1. Denial of refund of Service Tax on the ground of limitation:
The appellant, located in a Special Economic Zone (SEZ) and engaged in the manufacture of Aluminium products, claimed a refund of Service Tax paid on 'erection and installation service' wholly consumed in the SEZ. The refund claim of Rs.15,99,135/- was denied by the Assistant Commissioner on the grounds of being time-barred and lack of required documents for certain invoices. The Commissioner (Appeals) upheld this decision, allowing only a partial refund of Rs.2,63,732/-.

2. Applicability of SEZ Act over other legislations regarding Service Tax exemptions:
The appellant argued that u/s 26(1) of the SEZ Act read with Rule 31 of the SEZ Rules, services rendered to SEZ units for authorized operations are exempt from Service Tax. They contended that Section 51 of the SEZ Act gives it overriding effect over other legislations, and thus, a notification under Service Tax cannot impose a time-limit for refunds. This view was supported by various judicial precedents, including GMR Aerospace Engineering Ltd., SRF Ltd., DLF Assets Pvt. Ltd., and Lupin Ltd.

3. Procedural requirements for claiming Service Tax refunds:
The appellant further argued that their refund claim was not under Notification No. 09/2009-S.T. but should be considered u/s 83 of the Finance Act read with Section 11B of the Central Excise Act, which allows a one-year period for claiming refunds. They cited the case of Tata Consultancy Services Ltd. to support their argument that the refund claim was filed within the permissible time frame.

Judgment:
The Tribunal observed that the appellant's refund claim was rejected solely on the ground of limitation as per Notification No. 09/2009-S.T. However, it was noted that the SEZ Act, being a specialized act with overriding provisions u/s 51, takes precedence over other laws. The Tribunal referred to the decisions in SRF Ltd., DLF Assets Pvt. Ltd., and Lupin Ltd., which held that the SEZ Act overrides the charging sections of other acts, making exemption notifications and their conditions redundant. Consequently, the Tribunal concluded that the refund claim should be allowed as it was filed within the one-year period prescribed u/s 83 of the Finance Act read with Section 11B of the Central Excise Act.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, holding that the refund claim could not be rejected on the ground of time bar. The operative part of the order was pronounced in open court.