2019 (1) TMI 775 - AT - Service Tax

SEZ Unit - refund of service tax paid - rejection on the ground that the appellant had failed to establish nexus between the service received and provided for authorized operations in SEZ - whether the appellant is entitled to refund of service tax paid on various input services used by them in the SEZ for authorized operations? - Held that - On going through the sample documents submitted by the appellant, it is found that the invoices were addressed to the appellant and payment of service tax is duly indicated in the said invoices and payment of service charges is entered in the journal voucher enclosed along with the invoices issued by the service providers. The appellant has categorically submitted that besides the activity of generation of electricity in the SEZ area, in no other activity is carried out by them where the input services have been used. Two refund claims which were also rejected as barred by limitation - Held that - Initially these claims were filed in time but voluntarily withdrawn by the appellant and again filed after six months. The department ought to have condoned the delay in filing the application for the second time. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Entitlement to refund of service tax paid on various input services used in SEZ for authorized operations
- Rejection of refund claims on grounds of time bar

Entitlement to refund of service tax:
The case involved appeals against the rejection of refund claims by the Commissioner of Central Excise (Appeals) regarding service tax paid on specified services for authorized operations in a Special Economic Zone (SEZ). The appellant, an SEZ unit for electrical energy generation, claimed refund under relevant notifications. The appellant contended that all services were approved by the Development Commissioner and used for authorized operations within the SEZ. Despite providing relevant documents like invoices and journal vouchers, the lower authorities rejected the claims. The appellant argued that the services were utilized solely for SEZ operations and produced evidence of payment to service providers. The Tribunal directed verification of these documents, and discrepancies arose regarding the submission of proof of service receipt and utilization in the SEZ. However, upon examination, it was found that the invoices indicated service tax payment and journal vouchers showed payment to service providers. The appellant also presented a Chartered Accountant's certificate supporting the claim. Previous Tribunal decisions favored the appellant's refund claims for similar services. The Tribunal noted that the services were exclusively used for electricity generation in the SEZ, supported by the CA certificate and past rulings, leading to the allowance of the appeals.

Rejection of refund claims on grounds of time bar:
Two refund claims were initially rejected as time-barred, as they were filed beyond the prescribed period. The appellant argued that the first application was timely but later withdrawn, justifying the subsequent filing after the deadline. They sought condonation of the delay, supported by a CA certificate confirming service utilization for authorized operations. The Tribunal opined that the department should have excused the delay in the second application, considering the initial timely submission. Consequently, the rejection of these claims on time bar grounds was deemed unjustified. The impugned order was set aside, and the appeals were allowed with appropriate relief as per the law.

This detailed analysis of the judgment highlights the issues of entitlement to service tax refund for SEZ operations and rejection based on time bar, elucidating the arguments, evidence presented, and the Tribunal's decision in each aspect.