2017 (4) TMI 229 - AT - Service Tax

Refund claim - recovery - Held that - appellants have been granted letter of approval for setting up a SEZ unit. It is also not disputed that the services were received for the purpose of SEZ unit. In the judgments of COMMISSIONER OF SERVICE TAX Versus ZYDUS TECHNOLOGIES LTD. 2014 (5) TMI 100 - GUJARAT HIGH COURT the issue whether the assessee is eligible for refund of service tax on services used prior to commencement of commercial production has been analyzed and held in favor of assessee - the assessee is eligible for refund. The impugned order upholding the demand and interest is set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against order upholding refund of service tax on input services

Analysis:
The appeal was filed against the Commissioner (Appeals) order, which upheld the refund of service tax paid on input services. The appellants claimed exemption for service tax paid on specified services for setting up a SEZ unit. The original authority sanctioned the refund, but after a year, the department issued a show cause notice for recovery of the refund. The original authority confirmed the demand, interest, and imposed a penalty. The Commissioner (Appeals) upheld the demand and interest but set aside the penalty. Two appeals were filed - one by the assessee against the confirmation of demand and interest, and the other by the department against the setting aside of the penalty.

The consultant for the assessee argued that the department did not appeal against the refund sanction, which had attained finality. The services were received for setting up the SEZ unit, supported by a letter of approval. The consultant cited relevant judgments to support the eligibility of refund even for services used before commercial production. The department reiterated the findings in the impugned order.

After hearing the submissions, it was found that the appellants had been granted approval for setting up the SEZ unit, and services were received for this purpose. Citing relevant case law, it was concluded that the assessee was eligible for the refund. The order upholding the demand and interest was set aside, and the appeal filed by the assessee was allowed with consequential reliefs. Consequently, the appeal filed by the department was dismissed.