2017 (5) TMI 338 - AT - Service Tax

Services to SEZ developer - N/N. 04/2004-ST - denial on the ground that respondent was a sub-contractor and was never awarded a contract by SEZ developer - Revenue was of the view that the respondent had never provided services directly to the SEZ unit but was contracted as a sub-contractor to provide services to a unit in SEZ - Held that - the said notification exempts any taxable service provided by any service provider for consumption of the service within a Special Economic Zone, subject to following/adhering to the conditions - It is also undisputed that all the conditions mentioned in the notifications are satisfied by the SEZ developer i.e. M/s Reliance Industries Ltd. Reliance was placed in the case of SUJANA METAL PRODUCTS LTD. Versus COMMISSIONER OF C. EX., HYDERABAD 2011 (9) TMI 724 - CESTAT, BANGALORE , where it was held that where the services are rendered to SEZ or a unit in SEZ, as long as it is rendered for consumption in a Special Economic Zone, the services are exempt. The provisions of Section 26 of the Special Economic Zone overrides provisions of other law and exempts any services or taxes if the same are consumed in Special Economic Zone. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Revenue's appeal against Order-in-Original No:13/ST/HB/12-13 dated 02/11/2012.
2. Applicability of Notification No.04/2004-ST for services provided to a SEZ developer.
3. Whether the respondent was eligible for service tax exemption under the notification.
4. Interpretation of conditions under Notification No.04/2004-ST for exemption.

Analysis:
The appeal before the Appellate Tribunal CESTAT MUMBAI was filed by the Revenue against the Order-in-Original passed by the Commissioner of Service Tax, Mumbai. The Revenue contended that the adjudicating authority had dropped proceedings initiated by the show cause notice without proper consideration of the case's facts. The main issue was whether the respondent, a sub-contractor, was eligible for service tax exemption under Notification No.04/2004-ST for services provided to a SEZ developer. The respondent had undertaken a contract to provide services in a SEZ developed by M/s Reliance Industries Ltd, based on a contract awarded by M/s Lloyds Insulation Ltd. The Tribunal examined the conditions specified in Notification No.04/2004-ST, which exempted taxable services provided to a SEZ developer or unit within the SEZ, subject to certain conditions being met.

The Tribunal noted that during the relevant period, the respondent had rendered services to a unit in the SEZ developed by the SEZ developer. The Tribunal emphasized that the conditions of the notification were satisfied by the SEZ developer, M/s Reliance Industries Ltd. Referring to a previous judicial pronouncement, the Tribunal highlighted that services rendered to a SEZ or a unit in a SEZ are exempt from tax as long as they are consumed within the Special Economic Zone. Additionally, the Tribunal pointed out that Section 26 of the Special Economic Zone Act supersedes other laws and provides exemptions for services consumed within a SEZ.

Based on the above analysis and the legal precedents, the Tribunal concluded that the appeal filed by the Revenue lacked merit. The Tribunal rejected the Revenue's appeal and upheld the impugned order as correct and legal, stating that no interference was required. The cross-objection was also disposed of accordingly. The Tribunal's decision reaffirmed the eligibility of the respondent for service tax exemption under Notification No.04/2004-ST for services provided to a SEZ developer, in line with the legal provisions and judicial interpretations.