2023 (10) TMI 497 - AT - Service Tax

Exemption from payment of service tax - services provided in SEZ units - denial on the ground that prescribed Form A1/A2 under the service tax notification, was not obtained prior to provision of service - HELD THAT - This Tribunal following the Ruling in the case of GMR Aero Space Engineering Ltd., 2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT observed that it is on record that required documentation was not available for the entire period of the dispute, but at the same time, it cannot be denied that at some point, the eligibility did exist. Further, observed that, procedural infirmities for a shorter and longer time, does not in any way frustrate the exemption accorded to the impugned supply of services. The appeal was allowed granting the benefit of exemption. Admittedly appellant have rendered services in the SEZ premises to the SEZ Units/Developer - the appellant is entitled to exemption - the impugned order set aside - appeal allowed.

Summary

Issues involved:
The issue involved in this appeal is whether the exemption from payment of service tax for services provided in SEZ units can be denied based on the non-fulfillment of prescribed conditions under the service tax notification.

Comprehensive Details:

Issue 1: Compliance with Exemption Notification
The appellant, a service provider in SEZ premises, claimed exemption from service tax under specific notifications. The Show Cause Notice proposed disallowing the exemption claim for export services, leading to a demand for service tax. The Commissioner confirmed the demand, citing non-compliance with the conditions of the exemption notification.

Issue 2: Legal Arguments
The appellant argued that non-compliance with procedures should not negate the exemption benefit. They relied on SEZ Act provisions exempting taxable services provided to SEZ Developers/Units for authorized operations. The appellant cited the overriding effect of the SEZ Act over other laws.

Issue 3: Precedent and Judicial Interpretation
The appellant referenced a High Court judgment where exemption on services to SEZ Developers was allowed despite non-filing of prescribed forms. The Supreme Court dismissed the Revenue's appeal against this judgment. The appellant also highlighted that compliance with Form A1/A2 was available for part of the disputed period.

Conclusion
The Tribunal found in favor of the appellant, citing precedents and legal provisions. It held that the appellant, having provided services in SEZ premises, was entitled to exemption. The impugned order was set aside, granting the appellant consequential benefits as per the law.