2023 (9) TMI 136 - AT - Service Tax

Refund claims of SEZ Units/Developers - rejection on the ground of filing beyond the prescribed period of one year or on the ground that since for that specific quarter they have already filed the refund claims earlier, second claim for the same quarter cannot be entertained? HELD THAT - When the services rendered by the appellant are fully exempted from service tax in terms of the provisions of the SEZ Act, which is complete code in itself, the condition for refund imposed under the Notification dated 1.7.2013 issued under the Finance Act are certainly inconsistent with the SEZ Act. A combined reading of Section 26(1)(e) ibid r/w Rule 31 ibid would show that the only condition required for availing exemption from payment of Service Tax by a SEZ unit/ Developer is that the taxable service should be used for carrying out the authorized operations by the SEZ Unit/Developer. There is no dispute that the operations of the appellant were authorised under the SEZ Act and there is no allegation anywhere that any of the conditions laid down under Rule 31 have been violated. Whether there is any requirement of filing refund claim in same quarter under exemption Notification when the Service Tax itself was exempted by Section 26 ibid? - HELD THAT - It is settled and can be safely said that availability of exemptions under Section 26 ibid would depend only upon the terms and conditions prescribed under the SEZ Act or Rules framed thereunder and cannot be restricted by the terms or conditions including limitation as prescribed in the notification - Since exemption from payment of service tax on taxable services rendered to a Developer or a Unit by any service provider shall be available for the authorized operations in a Special Economic Zone therefore the appellant, for those services, are not liable to pay any tax/duty as Article 265 of the Constitution of India specifically provides that no tax or duty can be either levied or collected except by authority of law - the genuineness or otherwise of the refund claims, after examining the invoices and other relevant documents, cannot be done at this stage as the same have to be verified by the authority concerned for which the matter needs to be remand. The matter is remanded to the Adjudicating Authority to the limited extent in order to enable the said authority to grant the refund claim, after carefully verifying the relevant supporting documents and after following the principle of natural justice - Appeal allowed by way of remand.

Summary

Issues Involved:

1. Justification of rejection of refund claims due to filing beyond the prescribed period of one year.
2. Justification of rejection of refund claims due to filing multiple claims for the same quarter.
3. Requirement of filing refund claim in the same quarter under exemption Notification when the Service Tax itself was exempted by Section 26 of the SEZ Act.

Summary:

Issue 1: Rejection of Refund Claims Due to Filing Beyond the Prescribed Period of One Year

The appellant, a SEZ unit, contended that their accounting software and data corruption in 2013-14 caused delays in filing refund claims. They filed a refund claim of Rs. 39,15,006/- on 28.3.2018 for the period 2013-14 to 2016-17, citing Notification No.12/2013-ST dated 1.7.2013 and requested condonation of delay. The lower authorities rejected the claims on grounds of limitation, stating that the notification mandated filing within one year from the service tax payment month, and no power was vested for condonation of delay.

Issue 2: Rejection of Refund Claims Due to Filing Multiple Claims for the Same Quarter

The appellant also faced rejection for filing multiple refund claims for the same quarter. They argued that the resignation of the concerned employee responsible for collating data caused the oversight. The learned Authorised Representative upheld the rejection, emphasizing that the notification did not allow multiple claims for the same period.

Issue 3: Requirement of Filing Refund Claim in the Same Quarter Under Exemption Notification

The Tribunal examined whether the requirement of filing refund claims under the exemption notification was necessary when Section 26 of the SEZ Act already exempted the service tax. The Tribunal referred to Sections 26 and 51 of the SEZ Act and Rule 31 of the SEZ Rules, which provide overriding effect over other laws. It cited the GMR Aerospace Engineering Limited case, where the High Court ruled that SEZ units are entitled to exemptions under Section 26 without being subject to conditions in notifications issued under the Finance Act. The Tribunal concluded that the conditions in the notification were inconsistent with the SEZ Act, and thus, the appellant was entitled to the refund as their operations were authorized under the SEZ Act.

Conclusion:

The Tribunal set aside the impugned order and remanded the matter to the Adjudicating Authority to verify the genuineness of the refund claims based on supporting documents. The appellant was directed to provide all relevant documents, including invoices, to support their refund claim. The appeal was disposed of on these terms.