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2018 (12) TMI 1189 - AT - Service TaxLiability of service tax - amount of tax to be paid on the services rendered by the appellant to SEZ Unit - Held that - The services is rendered by appellant to SEZ unit and the said SEZ unit is authorised to receive the services without payment of service tax. The provisions of Section 51 of the Special Economic Zone Act, 2005 mandates that the provisions of SEZ Act shall have overriding effect notwithstanding anything inconsistent in any act. The provisions of Section 26 of SEZ Act mandates for exemption of service tax, draw backs and concessions to developer - On holistic reading, the services rendered to an SEZ unit are not taxable, is the settled law. There being no dispute that the services rendered by the appellant to an unit in SEZ who was supposed to follow the provisions of the law, which he did not do so, would not mean that appellant should be saddled with the service tax liability - appeal allowed - decided in favor of appellant.
Issues:
1. Tax liability on services rendered to SEZ unit. Analysis: The appeal challenged an Order-in-Appeal concerning the tax liability on services provided by the appellant to a Special Economic Zone (SEZ) unit. The appellant offered Tour Operator Services/Rent-a-cab service to an SEZ unit during a specific period. The SEZ unit, authorized to receive services without paying service tax, received cabs from the appellant. However, a show cause notice was issued to the appellant for non-payment of service tax. The adjudicating authority confirmed the demands and imposed penalties, which were upheld by the first appellate authority due to the absence of a required declaration from the SEZ unit. The appellant contended that services to SEZ units are not taxable as per the SEZ Act, citing precedents like Reliance Ports and Terminals Ltd. vs. CCE, Rajkot and TATA Consultancy Services Limited. The appellant argued that SEZ Act provisions override any inconsistent laws, thereby exempting services to SEZ units from service tax. The judgment delved into the legal intricacies of service tax liability on services rendered to SEZ units. It emphasized the supremacy of SEZ Act provisions, particularly Section 51, which mandates exemptions from service tax, drawbacks, and concessions to developers. The judgment referenced cases like Reliance Ports and Terminals Ltd. and TATA Consultancy Services Limited to support the appellant's argument that service tax liability does not arise on service providers when services are provided to SEZ units. The judgment also highlighted the operationalization of exemptions for services provided to SEZ units under Notification No. 9/2009-S.T. and No. 15/2009-S.T. The judgment analyzed the provisions of SEZ Act, 2005, emphasizing that no service tax is payable on services provided to SEZ units, as per Section 26(1)(e) and Rule 30(10) of SEZ Rules, 2006. Additionally, Section 51 of the SEZ Act underscores the overriding effect of SEZ Act provisions over inconsistent laws, affirming the non-taxable nature of services rendered to SEZ units. In conclusion, the judgment held that the impugned order was unsustainable and set it aside, allowing the appeal. The decision was based on the legal precedence, statutory provisions, and the overarching principle that services provided to SEZ units are exempt from service tax under the SEZ Act, 2005.
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