2018 (11) TMI 1463 - AT - Service Tax

SEZ unit - refund of service taxes paid - services which were used in the authorized operations of the SEZ units - rejection of refund claim on the ground that the operations such as sales, marketing, HRD, etc., were not included in the authorized operations - N/N. 09/2009 - N/N. 15/2009. Held that - Apparently, the services that are provided by the appellant in the case on hand find place in the list of specified services approved by the UAC. Therefore, the position is that the appellant having manufactured footwear, etc., is certainly not for self-consumption and therefore, the same are required to be sold/marketed and thus the reasons given by the adjudicating authority are illogical. The Approval Committee has issued the LoA and the same is issued by the Development Commissioner, Government of India, Ministry of Commerce and Industry, Department of Commerce after examining the nexus and therefore, the Revenue cannot sit over the judgement of the certificate - The certificate of approval of services by the UAC makes it further clear that the list of specified services which are rendered in relation to the authorized operation has granted this specific certificate and therefore, the approval cannot be questioned by the Revenue since the jurisdictional Commissioner of Central Excise is also a member of the Approval Committee. The Mumbai Bench of the Tribunal in the case of Tata Consultancy Services Ltd. 2012 (8) TMI 500 - CESTAT, MUMBAI has held that Once the Approval Committee has given the nexus and the justification, rejection by the lower authorities of the refund claims of the service tax paid on various services on this ground is bad in law. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection for services used in SEZ authorized operations.

Analysis:
The appellant, a SEZ unit, sought a refund for services used in authorized operations as per Notification No. 09/2009-ST. The Revenue rejected most refund claims but allowed a partial refund. The first appellate authority upheld the rejection, stating services must be used in authorized operations. The appellate tribunal noted that the LoA listed authorized operations as footwear manufacture. The approved services list by UAC included services provided by the appellant. The tribunal found the rejection illogical as the services were used for sale/marketing, not self-consumption. The tribunal referenced a Mumbai Bench ruling in Tata Consultancy Services Ltd. case, emphasizing the Approval Committee's nexus certification for services used in authorized operations.

The tribunal analyzed Notification No. 09/2009 (ST) and its conditions, noting no non-fulfillment by the appellant. The LoA was amended to include additional items for manufacture. The UAC approved specified services for authorized operations. The tribunal found the Revenue cannot question UAC's approval, and the rejection was baseless. The Mumbai Bench ruling emphasized that services wholly consumed within SEZ are eligible for refund under Section 11B of the Central Excise Act, even if not under Notification No. 09/2009-ST. The tribunal set aside the first appellate authority's illogical reasons and allowed all appeals with consequential benefits.

In conclusion, the tribunal set aside the rejection of refund claims for services used in SEZ authorized operations, emphasizing the nexus certification by the Approval Committee and the eligibility for refund under Section 11B of the Central Excise Act. The tribunal found the first appellate authority's reasons illogical and contrary to the law, allowing all appeals with full consequential benefits.