2018 (8) TMI 961 - AT - Service Tax

Refund of Service Tax - rejection of refund on the ground that many services were consumed wholly with the SEZ - whether the appellant is entitled for refund of service tax paid on input service received in their units which is an SEZ Unit under N/N. 15/09-ST? - Held that - The issue is no more res-integra and is decided in the case of Sears IT & Management Services (I) Pvt. Ltd. 2017 (9) TMI 888 - CESTAT MUMBAI where it was 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. The impugned order is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Refund of service tax paid on input service received in SEZ unit under Notification No. 15/09-ST.

Analysis:

Issue 1: Entitlement for Refund of Service Tax
The appellant sought a refund of service tax paid on input services received in their SEZ unit. Both lower authorities denied the refund claim, citing that some services were wholly consumed within the SEZ, thus disqualifying them for a refund. The appellant argued that despite non-compliance with Notification 15/09-ST, they are entitled to a refund under Section 11B of the Central Excise Act, as per various tribunal judgments. The appellant's counsel relied on precedents like Sears IT & Management Service, Intas Pharma Ltd, Zydus Tech Ltd, and others to support their claim.

Issue 2: Interpretation of Notification No. 9/2009-ST
The Tribunal analyzed the provisions of Notification No. 9/2009-ST as amended by Notification No. 15/2009-ST. The clause © of the notification specified that services consumed wholly within the SEZ are not eligible for exemption by way of refund. However, all services provided in relation to authorized operations in a SEZ and received by the SEZ unit are exempted. The Tribunal concluded that even though services were consumed within the SEZ, the appellant was entitled to a refund under Section 11B of the Central Excise Act as the services were otherwise exempted. The Tribunal directed the adjudicating authority to process the refund claim under Section 11B.

Issue 3: Legislative Immunity and Refund Claims
In the case of Intas Pharma Ltd., the Tribunal discussed the legislative immunity provided under the Special Economic Zones Act, 2005. It highlighted that any service tax paid by a provider for services in relation to SEZ operations must be refunded. The Tribunal emphasized that Notification Nos. 9/2009 and 15/2009 facilitate the process of claiming refunds for taxable services provided to SEZ units. It clarified that the immunity to service tax under the SEZ Act cannot be eclipsed by procedural notifications. The Tribunal allowed the refund claim, emphasizing the entitlement under legislative immunity.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order and directing the sanctioning authority to verify the quantification and process the refund in accordance with the law. The judgments cited by the appellant supported the entitlement to a refund under Section 11B of the Central Excise Act, despite services being consumed within the SEZ. The analysis of legislative immunity and the interpretation of relevant notifications formed the basis for granting the refund claim in both cases discussed in the judgment.