2017 (8) TMI 1282 - AT - Service Tax

SEZ unit - Refund of service tax - N/N. 09/2009-S.T., dated 3-3-2009 as amended by No. 15/2009-S.T., dated 20-5-2009 - denial on the ground that the requirements of notification dated 3-3-2009 have not been complied with by the appellant - Held that - the disputed service were duly approved by the Development Commissioner in terms of notification dated 3-3-2009. Thus, the services consumed within the SEZ area should qualify for refund benefit under the Notification dated 3-3-2009, upto 19-5-2009, for the reason that notification dated 20-5-2009 will not have any retrospective application and the same will apply prospectively - rejection of refund not sustainable. Since, the service tax refund for the period upto 20-5-2009 has not been quantified, the matter should go back to the original authority for quantification of the refund amount. Appeal allowed by way of remand.

Summary

Issues: Denial of refund of service tax under Notification No. 09/2009-S.T., dated 3-3-2009 as amended by No. 15/2009-S.T., dated 20-5-2009 to Special Economic Zone (SEZ) - Whether services utilized in SEZ operation qualify for refund benefit under the notification.

Analysis:
1. The appellant filed a refund application claiming refund of service tax paid on various services utilized in the authorized operation of the SEZ under Notification No. 09/2009-S.T., dated 3-3-2009. The Department rejected the refund application stating non-compliance with the notification's requirements. The Commissioner (Appeals) allowed a partial refund and rejected the rest, citing services consumed within the SEZ area not related to authorized operations, as per Notification No. 15/2009, dated 20-5-2009.

2. Notification No. 09/2009 exempts taxable services provided in relation to authorized SEZ operations. The refund is administered by refunding service tax paid on such services. The conditions were modified by Notification No. 15/2009, specifying that services wholly consumed within SEZ are not eligible for refund. For refund benefit, services must be used in relation to "authorized operations in the SEZ."

3. The appellant utilized services in relation to their SEZ operation, as evidenced by a letter to the service tax authorities and approval by the Development Commissioner. The services consumed within the SEZ area should qualify for refund under the Notification dated 3-3-2009 until 19-5-2009, as the notification dated 20-5-2009 applies prospectively. Refusal of refund claim before 20-5-2009 is deemed unsustainable. The matter is referred back to the original authority for quantifying the refund amount.

4. The Tribunal sets aside the impugned order and remands the matter to the original authority for a fresh order in line with the observations. The appeal is disposed of accordingly.