2019 (2) TMI 873 - AT - Service Tax

Refund of service tax - SEZ unit - Event Management Services - Management or Business Consultant Service - Sitting Services - Stock Exchange Service - Insurance Service - Subscription Fee - Business Auxiliary Service - Membership and Photography service - the impugned services were not approved at any point of time prior to the filing of the refund claim - Held that - Initially when the refunds were filed, these impugned services were not approved by UAC and when the objections were raised by the Revenue, thereafter, the appellants vide its various letters sought approval from the UAC and finally UAC approved various input services except Event Management and Photography services. Since all the input services except Event Management and Photography services have been approved by the UAC, though subsequently, therefore, the appellants are entitled to seek refund on these input services which have been approved. Refund allowed except for Event Management and Photography services - appeal allowed in part.

Summary

Issues:
Refund claim rejection based on services not approved by UAC under Notification No.12/2013-ST dated 1.7.2013.

Analysis:
The appeals were filed against the Commissioner (A)'s order rejecting the refund claims by both M/s. Biocon Ltd. (SEZ Unit) and M/s. Biocon Ltd. (SEZ Developer). The claims were for service tax paid on specified services used for SEZ operations under Notification No.12/2013 for the periods July 2015 to December 2015. The Asst. Commissioner partially sanctioned the refund claims, rejecting parts related to services like Event Management, Business Consultant, Sitting Services, Insurance, Subscription Fee, etc., as they were not approved by the Unit Approval Committee (UAC) and were not specified services. The appeals were made to the Commissioner (A) who upheld the rejection.

The appellant contended that the impugned orders lacked legal sustainability as no show-cause notice was issued before rejection, and the services were not used for authorized operations, fulfilling the Notification's conditions. The appellant argued that the SEZ Act, 2005 overrides other Acts, and UAC approval is a procedural requirement, not mandatory for refund. The appellant cited legal precedents to support their arguments and highlighted that UAC later approved the services in question.

The AR defended the impugned order, emphasizing the UAC's requirement for service approval under the Notification. While some services were later approved by the UAC, Event Management and Photography Services remained unapproved. The AR argued that for these unapproved services, the refund should not be granted.

The Tribunal found that initially, the services were not approved by the UAC, but the appellants later sought and obtained approvals for most services, except Event Management and Photography. The UAC's subsequent approval of various input services, excluding the two unapproved ones, led the Tribunal to allow the appeals for approved services and deny for the unapproved ones. Consequently, the impugned order was set aside for approved services, allowing the refund claims, except for Event Management and Photography services.

In conclusion, the appeals were disposed of in favor of the appellants for approved services, while denying the refund for unapproved services, based on the UAC's subsequent approvals and the legal interpretation of the SEZ Act and relevant Notifications.