2016 (3) TMI 673 - AT - Service Tax

Eligibility of refund claim on input services viz. Company Secretary Service, Chartered Accountant Service, Security Service, Legal Consultancy services etc - Rule 5 read with Notification No.12/2013 dt. 1.7.2013 - Appellant registered as Multi Product Special Economic Zone (MPSEZ)claimed refund of service tax on Company Secretary Service, Chartered Accountant Service, Security Service, Legal Consultancy services etc. used towards authorized operation of SEZ - Held that - as regards legal services on perusal of various bills, and invoice, invoice has been raised for appearing before Hon ble Madurai Bench of Madras High Court on 13.1.2013 wherein ₹ 10,00,000/- was paid. Also there is an invoice raised towards professional charges in connection with appearing before Hon ble Madurai Bench of High Court, wherein the appellants have paid legal fees of ₹ 10,05,000/-. These invoices clearly show that fees have been paid for the appeal suit. In bills it has been clearly mentioned that amount has been paid in connection with Appeal Suit which was related to Madurai Land Land Acquisition matters pending before Madurai Bench of the Hon ble Madras High Court. From the challan dt. 29.3.2014, it is seen that the appellant have remitted the service tax under reverse charge under the services of legal consultancy service. Bills and remittances of service tax clearly confirms that appellant being a developer of AMRL Hi-Tech City has to fight legal case. Since the case relates to land acquisition of 2520 acres the input services in dispute were used as authorized operation of SEZ as a developer. Therefore, the appellants are eligible for refund under Rule 5 of CCR read with Notfn No.12/2003 as amended on the input services i.e. Company Secretary Service, Chartered Accountant service , Security service, Legal Consultancy service, ITS service, GTA service. - Decided in favour of appellant with consequential relief

Summary

Issues:
- Partial rejection of refund claim on input services under Rule 5 read with Notification No.12/2013
- Eligibility of refund for legal services, security services, and GTA services under reverse charge mechanism
- Lack of evidence supporting the use of certain services towards authorized operation of SEZ as a developer

Analysis:
1. Partial Rejection of Refund Claim: The appellant, a developer in a Special Economic Zone (SEZ), filed a refund claim for service tax paid on various input services under Rule 5 of CCR. The refund claim was partially rejected by the adjudicating authority and Commissioner (Appeals) on the grounds that certain services, such as Company Secretary Service, Chartered Accountant Service, Security Service, and Legal Consultancy services, were not supported by evidence showing their use in the authorized operation of the SEZ. However, the consultant argued that most input services, including legal services, were essential for SEZ development, supported by invoices and bills.

2. Eligibility of Refund for Specific Services: The consultant contended that legal services, security services, and GTA services were paid under the reverse charge mechanism, with expenses incurred due to litigation related to SEZ development. The appellant, as a developer associated with a joint venture, had paid legal fees to various advocates and Additional Solicitor General for litigation. The Tribunal noted that the appellant was registered with the Development Commissioner and approved for claiming benefits under Notification 12/2013 for specified services, including legal consultancy, security agency, and chartered accountant services.

3. Lack of Evidence and Decision: The appellate authority upheld the rejection of the refund claim based on the absence of evidence demonstrating the use of certain services in SEZ operations. However, upon review of invoices and bills submitted, the Tribunal found clear evidence of payments made for legal services related to SEZ development, including appearing before the High Court for land acquisition matters. The Tribunal concluded that the appellant was eligible for a refund on services like Company Secretary Service, Chartered Accountant service, Security service, Legal Consultancy service, ITS service, and GTA service, amounting to &8377; 18,13,434, subject to verification by the original authority.

In conclusion, the Tribunal allowed the appeal, directing the appellant to produce all original documents for verification and granting a refund of the disputed amount. The decision emphasized the importance of evidence supporting the use of input services in SEZ development and clarified the eligibility criteria for claiming refunds under Rule 5 of CCR and relevant notifications.