2019 (10) TMI 816 - AT - Service Tax

Refund of service tax - tax paid on input services used for various operations of the SEZ unit - rejection of refund claim on the ground of Letter of approval of list of services required for authorized operations was received after the period of refund i.e. on 07.07.2011, non-production of documentary evidence to substantiate receipt and use of specified services within the SEZ area and on the ground of time limitation. Letter of approval of list of services was received by the appellant on 07.07.2011 - HELD THAT - Notification dated 01.03.2011 at para 2(b) provides that for the purpose of claiming exemption, the Developer or Unit of SEZ shall obtain a list of taxable services as are required for the authorized operations approved by the Approval Committee. The said clause nowhere specified that the Letter of Approval has to be obtained before filing of the refund applications - Since the fact is not under dispute that the appellant is governed under the SEZ Scheme and procuring the services on the basis of Letter of Approval issued by the competent authority i.e. Approval Committee, denial of refund benefit on the ground of non-submission of Letter of Approval prior to the date of refund claim should not be considered as legal and proper - the denial of refund benefit on this ground is not sustainable. Denial of refund benefit on the ground of non-submission of documentary evidence to substantiate the receipt and use of specified services - HELD THAT - On perusal of the original and the impugned orders, I do not find that the authorities below have specifically alleged regarding non-compliance of the said conditions by the appellant. Since the appellant had submitted the information as prescribed under Table (B), denial of refund benefit on the alleged ground of non-submission of documents cannot also be sustained. Time Limitation - HELD THAT - The Notification dated 01.03.2011 at para 3(e) provides that claim for refund shall be filed within one year from the end of the month, in which actual payment of service tax was made by the SEZ unit. The said clause provides discretion to the Central Excise officers for extending the period of limitation - In this case, though the refund application was not filed within the stipulated time, but the empowered authorities under statute have not extended the time limit for entertaining the refund application. Since the fact of use of input services for the purpose of SEZ operations was not alleged or denied by the department, as per the conditions of notification, the appellant should be entitled for the refund benefit. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of service tax paid on input services used in SEZ unit denied based on late filing, lack of documentary evidence, and approval timing.

Analysis:
The appellant, engaged in backend operations for a group company in SEZ, filed refund applications for service tax paid on input services. The original authority rejected the applications citing late filing, absence of documentary evidence, and approval timing. The appellant argued that the notification did not mandate approval before service provision, referencing relevant case law. They contended that no documentation was required for service use proof, supported by a tribunal decision. Additionally, the appellant challenged the rejection based on limitation, emphasizing the discretionary nature of the authority's power, as per tribunal precedents.

The Revenue representative upheld the original findings, emphasizing the strict time limitation specified in the notification for refund application submission. They argued that no written request for extension was made, justifying the rejection based on the notification's provisions. After hearing both sides, the Tribunal examined the case details.

The Tribunal acknowledged the SEZ unit's operation under specific regulations allowing for service tax exemption and refund claims. Regarding the approval timing issue, the Tribunal noted that the notification did not require pre-approval before refund application submission. Denial based on this ground was deemed unjustified. On the lack of documentary evidence, the Tribunal found no specific non-compliance allegation and ruled in favor of the appellant due to the submitted information meeting prescribed conditions.

Regarding the limitation issue, the Tribunal highlighted the notification's provision for a one-year refund claim window, with discretion for extension by authorities. Despite late filing, as the department did not contest service use for SEZ operations, the Tribunal deemed the appellant entitled to the refund. Citing relevant tribunal decisions, the Tribunal overturned the impugned order, allowing the appeals and granting the appellant the refund benefits.