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2023 (7) TMI 205 - AT - Service TaxExemption for services provided by sub-contractor to contractors appointed by a Developer or Unit in the SEZ Act - HELD THAT - In the present matter SEZ units appointed main contractors for carrying out work and main contractor appointed to Appellant as sub-contractor for carrying out works of SEZ units. Further in term of Notification No. 9/2009-ST dated 03.03.2009 service tax exemption is available to services received by the Developer of units of SEZ with approval from the approval committee. In the instant case appellant does not have any approval form the competent authority to provide the services to Developer or SEZ units. In terms of said Notification No. 9/2009 ST, as service provider who provides services to SEZ units or developers of SEZ, has to pay Service tax on services so provided on which service receiver i.e. SEZ units or developer of SEZ may claim refund - Even though the sub-contractor provided the service as sub-contractor to the main contractor but it is not under dispute that the service was provided in the SEZ which prima-facie show that services were provided by the appellant as sub-contractor which was ultimately received by the SEZ developer or unit in SEZ. It is also the contention of the Revenue that the services provided by sub-contractor are not approved. In this regard it is found that it is not the service provider specific if the services are approved in relation to the main contractor, there should not be any need of separate approval of list of services with the sub-contractor. The appeal is allowed by way of remand to the Adjudicating Authority to pass a fresh order.
Issues involved:
The issues involved in the judgment are the applicability of service tax exemption to services provided by a sub-contractor to contractors appointed by a Developer or SEZ unit, the interpretation of SEZ Act and Rules regarding service tax exemption, and the contention of the Revenue regarding the approval of services provided by the sub-contractor. Summary: 1. The appellant, a service provider registered with the Service Department, provided services to M/s ONGC Petro Additions Ltd. (M/s OPAL), a SEZ unit, through a sub-contract with M/s IVRCL. The Revenue alleged that the appellant wrongly availed service tax exemption, resulting in non-payment of service tax amounting to Rs. 1,95,31,310. 2. A show cause notice was issued proposing a demand for service tax, interest, and penalty, which was confirmed in the Order-in-Original dated 13-07-2016. The appellant challenged this before the Tribunal. 3. The appellant contended that as a sub-contractor providing services exclusively to SEZ units, they were not liable to service tax. They relied on Board Circular No. 147/16/2011-ST and relevant legal decisions to support their argument. 4. By interpreting the SEZ Act and Rules, the appellant argued that the services rendered were fully exempted from service tax, and the subsequent notifications adding conditions for exemption were inconsistent with the SEZ Act's provisions. 5. The appellant emphasized that the location of the service provider is irrelevant for exemption under SEZ Rules, and any new conditions introduced through notifications were contrary to the SEZ Act's purpose of promoting exports. 6. The appellant cited various legal precedents to support their interpretation of the SEZ Act and Rules, emphasizing that any conditions for exemption should align with the statutory provisions. 7. Regarding the timeliness of the demand, the appellant argued that the department's claim of discovering non-payment of service tax only during the audit was unfounded, as statutory returns were regularly filed. 8. The Revenue reiterated the findings of the impugned order, emphasizing the lack of provision for exemption for services provided by a sub-contractor to contractors appointed by a Developer or SEZ unit. 9. The Tribunal, after considering the submissions, found that the services provided by the appellant as a sub-contractor in the SEZ were prima facie received by the SEZ developer or unit, warranting a reconsideration of the issues by the Adjudicating Authority. 10. The Tribunal set aside the impugned order and remanded the case to the Adjudicating Authority for a fresh decision in light of the observations made and legal precedents cited by both parties. (Separate Judgment by Judges: None)
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