2018 (7) TMI 1013 - AT - Service Tax

SEZ Unit - Refund of service tax paid - N/N. 12/2013-ST dated 1/7/2013 - case of Revenue is that Bond was accepted by the competent authority on 9/3/2016 but the lease agreement has been entered into prior to such date, i.e., on 14/12/2015 - Held that - The service tax in the present case has been paid for lease of the land on which the respondent unit is situated within the SEZ. Since, the operation is approved by the LOA, the main condition of the Notification stands satisfies - the Bond also has been executed and accepted by the competent authority on 9/3/2016. Even though the lease agreement has been entered prior to such date, it is seen that the refund claim for the same in terms of the N/N. 12/2013 has been preferred only after the execution of the Bond. Refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
Grant of refund under Notification No. 12/2013 for service tax paid on lease agreement for SEZ unit.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal No. 12/2017-18 dated 23/1/2018. The respondent, a SEZ unit, entered into a lease agreement for the land on which the unit was situated. The consideration paid included service tax. The respondent filed a claim for refund of the service tax, which was rejected by the Original Authority but allowed by the Commissioner (Appeals), leading to the present appeal.

The Revenue argued that the refund claim was not admissible because the lease was for a period exceeding 90 years, contrary to the provisions of the Notification. Additionally, they contended that the lease agreement was entered into before the acceptance of the Bond-CUM-LUT, as specified in the Letter of Approval issued to the respondent. On the other hand, the respondent's counsel justified the refund claim, stating that it was filed after the acceptance of the Bond, making it admissible.

The Tribunal examined the dispute in light of Notification No. 12/2013 dated 1/7/2013, which allows for the refund of service tax paid by SEZ units for services used in their authorized operations. Since the service tax was paid for leasing the land within the SEZ where the approved operations were conducted, the main condition of the Notification was satisfied. The lower authority's decision to grant the refund was upheld, considering that the Bond had been accepted before the refund claim was made, even though the lease agreement predated the Bond acceptance.

Ultimately, the Tribunal upheld the impugned order, rejecting the Revenue's appeal. The decision was based on the fact that the refund claim was made in accordance with the Notification after the acceptance of the Bond, despite the timing of the lease agreement.