2019 (10) TMI 1153 - AT - Service Tax

Refund of service tax - SEZ units - input services used for authorised operations - refund denied placing reliance in the Notification dated 01.03.2011 and 20.06.2012 - HELD THAT - The issue decided in the case of JARDINE LLOYD THOMPSON INDIA PVT. LTD. VERSUS COMMISSIONER OF CGST, CE SERVICE TAX NAVI MUMBAI 2019 (10) TMI 816 - CESTAT MUMBAI where it was held that 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 - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund entitlement of service tax paid by a SEZ unit on input services used for authorized operations.

Analysis:
The Appeals were filed challenging the order denying refund of service tax paid on input services by the SEZ unit. The department relied on specific notifications to deny the refund. The Appellant argued that for services wholly consumed within the SEZ, full refund is available, while for services not wholly consumed within the SEZ, a prescribed formula should be applied. The Appellant contended that the meaning of 'wholly consumed' as per the notifications was not considered by the authorities. The Authorized Representative for the revenue supported the department's findings.

During the hearing, it was noted that similar Appeals by the Appellants had been disposed of favorably in a different case. The Appellant's unit was governed under a specific notification allowing for the procurement of input services without service tax payment and claiming refunds where applicable. The Appellant opted to pay service tax on input services and filed refund applications. The lower authorities had raised objections regarding the timing of approval and submission of documentary evidence for services used. However, the Tribunal found that denial of refund based on these grounds was not legally justified.

The denial of refund on the basis of late filing of the application beyond the stipulated time was also discussed. The notification provided a one-year limit for filing refund claims, with discretion for extension by authorities. Since the use of input services for SEZ operations was not disputed, the Tribunal held that the Appellant should be entitled to the refund. Citing a previous decision where refunds were allowed for applications filed beyond the one-year period, the Tribunal found in favor of the Appellant in this case as well.

Based on the discussions and analysis, the impugned order denying the refund was set aside, and the Appeals were allowed with the consequential benefit of refund. The Tribunal noted that the issue was no longer open to debate as it had been settled in favor of the Appellant in a previous case, leading to the decision to allow the Appeals and grant relief as per the law.