2023 (2) TMI 731 - AT - Service Tax

Refund of Service Tax paid - specified services which are wholly consumed within the SEZ as per notification no. 9/2009-ST dated 03.03.2009 as amended vide notification no.15/2009-ST dated 20.05.2009 - HELD THAT - On going through the SEZ Act, 2005 and its section 26 (i)(e) specifically provides that all services imported into the SEZ to carry out authorised operation in SEZ shall be exempted. Further in terms of section 51 of the SEZ Act the provisions of the SEZ Act shall have overriding effect over all provisions of any other law for the time being in force and it is settled legal principle that any rule or notification cannot override the Act. Otherwise also the issue involved herein is no longer res integra in view of the decision of this Tribunal in the matter of M/S. EON KHARADI INFRASTRUCTURE PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE III 2015 (2) TMI 614 - CESTAT MUMBAI in which the Tribunal on an identical issue while deciding in favour of assessee held that refund cannot be denied under the Act for procedural infraction of having paid the Service Tax which ought not to have been paid by the service provider. So far as the reliance placed by learned Authorised Representative in the matter of M/S. EVEREST INDUSTRIES LTD. VERSUS CCE, MEERUT - I 2013 (4) TMI 526 - CESTAT NEW DELHI is concerned, it is found that the facts in that decision were different. Therein the refund of Cenvat Credit (Service Tax) under Rule 5 of Cenvat Credit Rules, 2004 in respect of input services used in manufacture of final products cleared for export was involved, in which it has been held by the Tribunal that the benefit of refund of accumulated Cenvat Credit on inputs used in manufacture of goods supplied to the SEZ units cannot be given whereas, in the instant matter it is the refund of Service Tax which is in issue and which as per SEZ Act the appellant was not liable to pay. Appeal allowed.

Summary

Issues:
1. Eligibility for refund of Service Tax paid on specified services wholly consumed within SEZ.

Analysis:

Issue 1: Eligibility for refund of Service Tax
The appeal was filed against the order passed by the Commissioner of GST & Central Excise rejecting the refund claim of Service Tax paid on specified services wholly consumed within the SEZ. The appellant's refund claim was partially rejected, leading to the appeal focusing on the amount of Rs. 1,91,007/- that was denied. The appellant argued that once Service Tax is paid, the eligibility for refund cannot be denied, emphasizing that the notification cannot override the benefits under the SEZ Act. The Chartered Accountant cited relevant tribunal decisions to support the appellant's case. On the contrary, the Authorized Representative for Revenue supported the findings of the impugned order and relied on a different tribunal decision. The Tribunal analyzed the notifications involved, highlighting the exemption and refund provisions for services used in SEZ operations.

Analysis Continued:

The Tribunal delved into the SEZ Act, specifically Section 26(i)(e) and Section 51, which provide exemptions for services imported into SEZ for authorized operations and establish the overriding effect of the SEZ Act over other laws. Referring to a previous tribunal decision, the Tribunal emphasized that the SEZ Act's provisions cannot be nullified by conditions in notifications. The Tribunal rejected the Revenue's reliance on a different case involving Cenvat Credit refund, clarifying the distinction from the current case involving Service Tax refund. The Tribunal also highlighted its previous decision in a similar case, where it held that Service Tax paid on input services wholly consumed within SEZ cannot be denied as a refund. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief as per law.

In conclusion, the Tribunal's detailed analysis focused on the eligibility for a refund of Service Tax paid on specified services wholly consumed within the SEZ, emphasizing the provisions of the SEZ Act and relevant notifications. The decision provided clarity on the legal principles governing such refunds and highlighted the importance of statutory provisions in determining refund eligibility in SEZ operations.