2023 (5) TMI 1024 - AT - Service Tax

SEZ unit - Refund claim - SEZ units are not liable for payment of service tax on the input services as per various notifications issued by the Government of India - input services or not - Renting of Immovable Property Services - Club Association Membership Services - Waste Management Services - nexus with output services or not - Cleaning Services - Event Management Services - Business Support Services - supporting documents i.e. invoices / details not submitted - Common / shared input services utilised at both the premises i.e. within the SEZ and outside SEZ. Contention that Renting of Immovable Property Services, Club Association Membership Services and Waste Management Services are not included in the list of specified services approved by SEZ authorities - HELD THAT - The competent authority under the SEZ Act, i.e. the Development Commissioner after consideration of the facts and circumstances of the case of the appellants, had included all those disputed services in the list subsequently approved by him. However, such approved list was not examined by the authorities below and the refund applications were not considered favourably by them - Since, the relevant factual aspects are required to be examined at the Original stage, the matter should go back to the Original Authority for examination of the approved list subsequently issued by the Development Commissioner and also to examine the judgements delivered on this ground by the judicial forums. Denial of the refund benefit on the ground that certain services have no nexus with the output service - HELD THAT - The authorities below have not specifically denied the fact that the appellant is operating as a SEZ unit for manufacture of electronic motor and such operations were as per the guidelines framed under the SEZ policy. In other words, there is no contra findings by the authorities below that the appellants are also engaged in the business of supplying the manufactured goods within the Domestic Tariff Area (DTA ). Thus, under such circumstances, since the entire goods were manufactured by utilizing the disputed services, the nexus between the input and the output services cannot be questioned by the refund sanctioning authority. However, the original authority had not examined or recorded any findings on the issue whether, the appellants have sold some goods within the DTA as a different unit. Therefore, on the ground of co-relation between the input service and the exportation of goods under the SEZ, the matter has to be verified again at the original stage. Non-submission of the documents for claiming the refund benefit - HELD THAT - Learned Advocate appearing for the appellant submitted that all those documents are available with the appellants and the same can be submitted by them before the original authority for proper verification. Since, the appellants accept the facts that they have relevant documents in their possession, and for proper examination of those documents, the matter should also be remanded back to the original authority. Appeal allowed by way of remand.

Summary

Issues Involved:
Refund of service tax paid by SEZ units on input services, compliance with notifications, denial of refund benefits, nexus between input and output services, non-submission of original invoices.

Analysis:
The judgment involved several appeals concerning the refund of service tax paid by SEZ units on input services. The appellants, M/s Portescap India Pvt Ltd., had filed refund applications which were rejected by the authorities below. The main issues revolved around compliance with notifications exempting SEZ units from service tax on input services, the nexus between input and output services, and non-submission of original invoices.

The appellants argued that the authorities had not considered the relevant notifications properly, extending the time limit for refund applications and condoning delays. They also contended that post-facto approval from the Development Commissioner should be honored, as it was final and conclusive. The appellants relied on various judgments to support their claim for refund.

On the other hand, the Revenue's representative maintained that the denial of refund benefits was in line with statutory provisions due to non-compliance with the notifications. After hearing both sides and examining the case records, the judge found that the refund applications were mainly denied due to certain grounds. These included services not approved by SEZ authorities, lack of nexus with output services, and non-submission of supporting documents.

Regarding services not approved by SEZ authorities, the judge noted that the approved list was not considered by the authorities below, leading to rejection of refund applications. The judge directed the matter to go back to the Original Authority for examination of the approved list and relevant judgments. For the nexus between input and output services, the judge found that further verification was needed at the original stage, especially regarding the sale of goods within the DTA. The matter was remanded back to the original authority for proper examination.

In conclusion, the impugned orders were set aside, and the appeals were allowed in favor of the appellants for remand to the original authority for a decision on merits. The original authority was instructed to consider the contents of the table provided in the judgment and grant a reasonable opportunity of personal hearing to the appellants before adjudication.

This detailed analysis highlights the key issues, arguments presented by both parties, and the judge's reasoning leading to the decision to remand the case back to the original authority for further examination and decision.