2022 (3) TMI 697 - AT - Service Tax

Refund of service tax paid on the services utilized in SEZ for authorized operations - Validity of remanding the matter back to the lower authorities - Commissioner (Appeals) has got power to remand the case to the lower authority after the amendment made in the relevant Section w.e.f.11.05.2001, or not - refund of Service tax on services which were not specified services for authorised operations. Power of remand of the Commissioner (Appeals) - HELD THAT - In the present case, the observation made by the Commissioner (Appeals) in Para XXII,XXIII, II, XII, XXXVIII mentioned in the part (D) of discussion and finding of impugned OIA cannot be regarded as amounting to a remand. In the present case, the directions given by the Commissioner (Appeals) for re-verifying a few aspects related to refund cannot be considered as amounting to a remand to the lower authority. These directions should have amounted to remand, if any, of the issues in dispute had been left unresolved by the Commissioner (Appeals) and sent back to the lower authority for a fresh decision or adjudication - This has not happened in the present case as all the issues raised by the Lower Authority in the adjudication order have been decided conclusively by the Commissioner (Appeals) as is evident from impugned Order-In-Appeal - there are no merits in the appeal of the Revenue. Refund of services which have been used by the respondent for authorized operation in the SEZ - HELD THAT - There is no dispute in the present matter that the said services have been used by the respondent for authorized operation in the SEZ. Further, it is found that not mentioning the said services in the Approved List is only a technical defect and it should not debar the substantive benefit to the assessee who has utilized those services for carrying out authorized operation. It is also noted that disputed input services have been subsequently approved by the Committee in the approval List of services. Refund in respect of Chartered Accountancy Service - HELD THAT - The Revenue disputed the refund on repair service on the ground that the pump was sent at Ahmedabad at vendor s premises. The services were provided at Ahmedabad, which is situated outside the SEZ. The refund is available for the services used within SEZ and not outside SEZ. It is found that there is no dispute by the revenue that the impugned services of repair were used by the appellant in relation to the authorized operation and also covered under the approved list. When there is no dispute about the use of the said services in authorized operation, the question of rejecting the refund claim in itself is incorrect. Rejection of refund - whether the Commissioner (Appeals) has erred by ignoring the procedural lapses viz. incorrect address, incomplete address, address not mentioned? - HELD THAT - In Some case the service provider mentioned the address of Sambhav Building. As per the condition of the Notification, the service should be utilized within SEZ, hence the address of SEZ is mandatory requirement. Hence such services cannot be considered as utilized in relation to authorized operation. On perusal of the impugned order, it is found that the Commissioner (Appeals) after going through the impugned Order-in-Original has passed a detailed order and thereafter set aside the Order-in-Original. There are no infirmity in the impugned order passed by the Commissioner (Appeals) - appeal dismissed - decided against Revenue.

Summary

Issues Involved:

1. Power of remand by the Commissioner (Appeals).
2. Refund of Service Tax on services not specified for authorized operations.

Issue-wise Detailed Analysis:

1. Power of Remand by the Commissioner (Appeals):

The Revenue argued that the Commissioner (Appeals) erred in remanding the matter back to the lower authorities, citing amendments to Section 35(A) of the Central Excise Act, 1944, which removed the Commissioner (Appeals)'s power to remand cases. The Revenue relied on the Supreme Court's ruling in MIL India Ltd. and two Punjab & Haryana High Court judgments. Conversely, the Respondent cited the CESTAT's ruling in their own case and the Gujarat High Court's decision in Commissioner of Service Tax Vs. Associated Hotels Ltd., which upheld the Commissioner (Appeals)'s power to remand.

The Tribunal noted the apparent conflict between the Supreme Court rulings in Umesh Dhaimode and MIL India Ltd. It observed that various Tribunal decisions, including Prem Steels P Ltd., Singh Alloys (P) Ltd., and Vikram Dhawan, concluded that the Commissioner (Appeals) still holds the power to remand matters. The Tribunal further clarified that the Commissioner (Appeals)'s directions in the present case did not amount to a remand but were instructions for re-verifying certain aspects related to the refund. Therefore, the Tribunal found no merit in the Revenue's appeal on this ground.

2. Refund of Service Tax on Services Not Specified for Authorized Operations:

The Revenue contended that the Commissioner (Appeals) erroneously allowed the refund of Service Tax on services not specified for authorized operations. The Commissioner (Appeals) had found that the services in question were subsequently approved by the approval committee, and the delay in approval was a procedural infraction that should not deny the substantive benefit of the refund.

The Tribunal upheld this view, noting that the services were used for authorized operations in the SEZ and that procedural lapses should not debar the substantive benefit. It cited several decisions, including Mangalore SEZ Ltd. and Intas Pharma Ltd., which supported the view that technical defects should not prevent the refund of Service Tax when services are used for authorized operations.

Regarding the refund of Chartered Accountancy Services, the Tribunal agreed with the Commissioner (Appeals) that the service provider was registered under the appropriate category, and the service was included in the approved list for authorized operations. The Tribunal also dismissed the Revenue's argument about the repair service being provided outside the SEZ, as the services were used for authorized operations within the SEZ.

The Tribunal found no merit in the Revenue's arguments about procedural lapses, such as incorrect or incomplete addresses, noting that the Commissioner (Appeals) had addressed these issues comprehensively and deemed them minor technical defaults that should not prevent the refund.

Conclusion:

The Tribunal upheld the Commissioner (Appeals)'s order and dismissed the Revenue's appeal, affirming the refund of Service Tax on the contested services and confirming the Commissioner (Appeals)'s power to remand matters for re-verification. The judgment emphasized that procedural lapses should not obstruct the substantive benefits of refunds for services used in authorized operations within SEZs.