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2022 (1) TMI 972 - AT - Service TaxRefund of Service Tax - SEZ unit - refund of service tax paid on lease premium charges paid - one time claim of refund instead of claiming on quarterly basis - HELD THAT - The appellant assessee have rightly been sanctioned the refund claim by the Commissioner (Appeals) as lease premium have been paid for acquiring the lease of the premises in the Special Economic Zone, which is essential for carrying of the business activity of the appellant assessee. It is further found that levy of service tax is exempt under the provision of the SEZ Act. Only the procedure for exemption is provided by way of refund. In this view of the matter, it is held that the Commissioner (Appeals) have erred in concluding that the amount of refund is disbursable on quarterly basis - the impugned order-in-appeal modified to the effect that the whole amount of eligible refund shall be disbursed in one go to the appellant assessee with interest under Section 11BB as per Rules - appeal allowed - decided in favor of appellant-assessee.
Issues Involved:
1. Whether the refund of Service Tax on lease premium charges paid by the appellant SEZ unit was rightly rejected. 2. Whether the refund should be sanctioned proportionately in each quarter. 3. Whether the refund claim was filed correctly as per the SEZ Refund Notification. 4. Whether the lease premium is taxable under the category of 'renting of immovable property' service. Issue-wise Detailed Analysis: 1. Rejection of Refund of Service Tax on Lease Premium Charges: The primary issue revolves around the refund of Service Tax paid by the appellant SEZ unit on lease premium charges. The appellant, engaged in manufacturing engineered stone for export, paid a significant lease premium to Mahindra World City for a 90-year lease. The service tax paid on this lease premium was claimed as a refund by the appellant. The impugned Order-in-Appeal (OIA) allowed the refund on merits but directed that it should be sanctioned proportionately each quarter, considering the possibility that the SEZ unit might not operate for the full 90 years. 2. Proportionate Sanctioning of Refund: The Department filed an appeal against the apportionment of the refund, arguing that there is no provision under the Finance Act, 1994, or the SEZ Refund Notification that allows for the disbursement of a refund on a quarterly basis over 90 years. The Department contended that every refund claim must be filed and disbursed within the specified time. The Tribunal found that the OIA's findings on apportionment were beyond the scope of the Show Cause Notice (SCN) and the Order-in-Original (OIO), thus not legally sustainable. 3. Compliance with SEZ Refund Notification: The Tribunal examined the compliance with the SEZ Refund Notification requirements and found that the appellant had satisfied all conditions, including the filing of the refund claim within one year of payment of service tax and filing only one claim per quarter. The Tribunal noted that the SEZ Refund Notification does not provide for the apportionment of a single refund claim, and thus, the allocation of the refund on a quarterly basis was improper. 4. Taxability of Lease Premium: The Tribunal considered whether the lease premium paid by the appellant was taxable under the 'renting of immovable property' service. The Tribunal referred to various judicial pronouncements and concluded that the lease premium, being a one-time payment for acquiring the lease, is in the nature of 'premium' or 'salami' and not taxable as periodic rent. The Tribunal relied on the case of M/s Greater Noida Industrial Development Authority v. CCE & ST Noida, which held that 'premium' or 'salami' is not taxable under the category of 'Renting of immovable property service.' Conclusion: The Tribunal allowed the appeal of the appellant SEZ unit, modifying the impugned order to disburse the entire eligible refund in one go with interest under Section 11BB as per rules. The Tribunal dismissed the appeal by the Revenue, finding no merit in their arguments. The operative part of the order was pronounced in open court.
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