2017 (1) TMI 383 - AT - Service Tax

Refund - GTA services - supply of goods to the SEZ Unit in terms of Notification No.40/2007-ST dated 17.09.2007 - denial on the ground that service tax paid on freight from place of removal (factory gate) to the SEZ Unit is not admissible to the appellant - whether, supply of goods to SEZ Unit should be considered as port of export ? - Held that - Sub-section (2) of Section 53 ibid mandates that SEZ shall be deemed to be a port under Section 7 of the Customs Act, 1962. On a conjoined reading of the provisions contained in Section 2 (m), 51 and 53 ibid, it reveals that goods supplied by a manufacture located in the Domestic Tariff Area (DTA) to the SEZ Unit / Developer should be considered as export and the premises of the SEZ is to be construed as the port of export - refund benefits allowed to the appellant on the GTA services utilized for transportation of goods to the SEZ Unit - appeal allowed - decided in favor of appellant.

Summary

Issues:
Claiming refund of service tax paid on GTA services for supply of goods to SEZ Unit under specific Notifications.

Analysis:
The appeal challenged the order by the Commissioner (Appeals) Central Excise and Service Tax regarding the denial of cenvat benefit on service tax paid on freight to the SEZ Unit. The central issue revolved around whether the supply of goods to the SEZ Unit should be deemed as "port of export." The SEZ Act, 2005 aimed at promoting exports and exempting duties and taxes within the SEZ area. Section 51 of the SEZ Act held precedence over other laws, deeming SEZ as a port under the Customs Act, 1962. The Tribunal analyzed the provisions of the Act and concluded that goods supplied to the SEZ Unit should be treated as exports, with the SEZ premises considered as "the port of export."

The Tribunal emphasized that services utilized for moving goods to the port of removal were eligible for refund benefits under specific Notifications. As per the SEZ Act, the unit and developer within the SEZ were to be regarded as the port of export. Therefore, the appellant had complied with the requirements of the Notifications to claim refund benefits. The Tribunal found no merit in the impugned order that denied refund benefits on GTA services for transporting goods to the SEZ Unit. Consequently, the Tribunal set aside the order and allowed the appeal in favor of the appellant, granting them the consequential benefit of refund.

In conclusion, the Tribunal's decision clarified the interpretation of the SEZ Act in relation to claiming refund of service tax paid on GTA services for supplying goods to the SEZ Unit. By aligning the provisions of the Act with the specific Notifications, the Tribunal ruled in favor of the appellant, emphasizing the SEZ premises as the port of export and upholding their entitlement to refund benefits for transportation services.