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2017 (9) TMI 888 - AT - Service TaxSEZ unit - refund claim - denial on the ground that the services received by the appellants were wholly consumed within the SEZ - Held that - From the plain reading of clause (c) of the N/N. 9/2009-ST, it is clear that the exemption by way of refund is not available to the services consumed wholly within the Special Economic Zone however as per the first para of the notification all the services provided in relation to authorized operations in a SEZ and received by SEZ unit are exempted therefore the services received by the appellant even though consumed wholly within the SEZ are exempted per se. In the facts of the present case there is no dispute that the service tax was paid on such services which are otherwise exempted. Therefore the appellant is entitled for the refund but not under N/N. 9/2009-ST but under Section 11B of the CEA, 1944 - the adjudicating authority directed to process the refund claim of the appellant under the provisions of Section 11B of the Act - appeal allowed by way of remand.
Issues:
Refund claim under Notification No. 9/2009-ST for services consumed within SEZ. Analysis: The appellant, a SEZ unit, filed a refund claim for services received in their SEZ under Notification No. 9/2009-ST. The claim was partially sanctioned, with a major portion rejected on the basis that the services were wholly consumed within the SEZ. The Commissioner (Appeals) upheld the rejection, stating that since the services were consumed within the SEZ, the exemption under the notification was not applicable. The appellant contended that even if services were wholly consumed within the SEZ, the exemption should apply as they were used in relation to authorized operations in the SEZ. The appellant argued that the service tax paid, though exempted, made them eligible for a refund under Section 11B of the Central Excise Act. The appellant cited various judgments to support their case. The Tribunal analyzed the relevant clause of Notification No. 9/2009-ST, which stated that services consumed wholly within the SEZ are not eligible for exemption. However, all services used in relation to authorized operations in a SEZ and received by a SEZ unit are exempted. The Tribunal concluded that even though services were consumed within the SEZ, they were exempted per se. The Tribunal determined that the refund for service tax paid on such services should not be governed by Notification No. 9/2009-ST but under Section 11B of the Central Excise Act. As the service tax was paid on exempted services, the appellant was entitled to a refund under Section 11B. The Tribunal directed the adjudicating authority to process the refund claim under Section 11B and allowed the appeal by remanding the case for a fresh order on the refund claim. This judgment clarifies the application of Notification No. 9/2009-ST concerning services consumed within a SEZ and highlights the eligibility for a refund under Section 11B of the Central Excise Act when service tax is paid on otherwise exempted services within a SEZ.
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