2019 (8) TMI 1374 - AT - Service Tax

Refund of service tax - upfront exemption for the authorized services wholly consumed in the SEZ - N/N. 12/2013-ST dt. 01/07/2013 - denial of refund only on the ground of non-submission of documents - scope of SCN - HELD THAT - All the show-cause notices have been issued only on the ground of non-submission of documents mentioned therein and in the show-cause notices, there is no allegation that the impugned services do not incorporate in the approved list of services by Deputy Commissioner. Further in the Order-in-Original, the adjudicating authority has admitted that the appellant has filed all the documents but still the original authority has rejected the refund claims on entirely new grounds which were not in the show-cause notice. In view of the settled law that the Revenue cannot travel beyond the show-cause notice - the impugned order has travelled beyond the show-cause notice and therefore not sustainable. The impugned order services though have been classified under BAS and Management Consultancy Services but in fact some of them are specifically mentioned in the approval list of services and are in the nature of BSS which have been availed in order to provide output services. Further as per Section 26 of the SEZ Act, a unit in the SEZ is exempt from payment of service tax under Chapter V of the Act on any taxable service provided to such unit. Similarly, there is exemption from payment of customs duties and excise duties levied on goods brought into the SEZ - Section 51 of the SEZ Act prevail over the provisions contained in any other law for the time being in force and it is the avowed policy of the Government of India that exports should not bear the burden of taxes. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Alleged violation of principles of natural justice in passing impugned orders.
2. Rejection of refund claims on new grounds not mentioned in show-cause notices.
3. Non-inclusion of disputed input services in the approved list.
4. Classification of services and eligibility for refund.
5. Interpretation of SEZ Act provisions and relevant notifications.

Analysis:

Issue 1: Alleged violation of principles of natural justice
The appellant contended that the impugned orders violated principles of natural justice as they were passed without proper grounds and without considering all submitted documents. The appellant argued that the rejection of refund claims on new grounds not mentioned in the show-cause notices was unjust. Citing legal precedents like Ballarpur Industries Ltd. Vs. CCE, Nagpur, the appellant emphasized the importance of adherence to show-cause notice allegations in decision-making.

Issue 2: Rejection of refund claims on new grounds
The appellant argued that the rejection of refund claims solely based on non-submission of documents, without alleging non-inclusion of disputed input services in the approved list, was improper. The appellant cited legal cases to support the argument that the show-cause notice forms the foundation of any case, and decisions cannot be based on grounds not raised in the notice.

Issue 3: Non-inclusion of disputed input services
The respondent contended that since the impugned services were not included in the approved list by the Deputy Commissioner, the appellants were not entitled to a refund of service tax on those services. Legal precedents like Kolland Developers Pvt. Ltd. Vs. CCE, Nagpur were cited to support this argument.

Issue 4: Classification of services and eligibility for refund
The appellant highlighted that even though services were classified under Business Auxiliary Services and Management Consultancy Services, they were actually related to Business Support Services (BSS) and other specific services. The appellant argued that non-inclusion in the approved list should not be a sole ground for denial of refund if evidence showed services were used in authorized SEZ operations.

Issue 5: Interpretation of SEZ Act provisions and notifications
The Tribunal analyzed the SEZ Act provisions and relevant notifications to determine the eligibility of the appellant for a refund. Citing Section 26 of the SEZ Act and legal cases like Makers Mart Vs. CCE&ST, Jaipur-II, the Tribunal concluded that the impugned orders were not sustainable in law. The Tribunal emphasized the exemption from service tax for SEZ units and the policy of the Government to relieve exports from tax burdens.

In conclusion, the Tribunal set aside the impugned orders, allowing the appeals of the appellant based on the analysis of legal principles, SEZ Act provisions, and relevant case law.