2023 (11) TMI 17 - AT - Service Tax

Entitled for exemption Notification No 04/2004- ST dated 31.03.2004 - sponsorship service received by the appellant can be considered as wholly consumed by the SEZ in their SEZ unit or not - HELD THAT - There is no dispute that even though the service was provided from outside SEZ but the same was received by the appellant in relation to their overall operation of SEZ unit. It is also undisputed that the appellant did not have any operation outside their SEZ unit. Therefore, the sponsorship service even though provided from outside SEZ but the same was used exclusively for the operation of SEZ unit. The term wholly consumed in SEZ means the service should not be used for SEZ as well as in any SEZ unit. It does not mean that service should be provided within the SEZ. This Tribunal in the case of identical service though provided outside SEZ i.e. event management service in the case of M/S. VISION PRO EVENT MANAGEMENT VERSUS CCE ST, CHENNAI 2018 (7) TMI 334 - CESTAT CHENNAI , has held that The department then cannot contend that these services are not eligible for refund since these are not consumed within SEZ. The appellant is eligible for the exemption in respect of the sponsorship service received from outside SEZ - the impugned order is set aside. Appeal is allowed.

Summary

Issues involved:
The issue involved in the present case is whether the sponsorship service received by the appellant can be considered as wholly consumed by the SEZ in their SEZ unit and consequently, entitled for exemption under Notification No 04/2004- ST dated 31.03.2004 or otherwise.

Comprehensive Details:

Issue 1: Sponsorship service exemption eligibility
The appellant argued that the sponsorship service, although provided outside the SEZ unit, was used exclusively for the operation of the SEZ unit, making it eligible for exemption under Notification No 04/2004-ST. It was emphasized that the service was integral to the SEZ unit's activities, as the appellant did not have any operations outside the SEZ unit. The Tribunal agreed that the term 'wholly consumed in SEZ' does not necessitate the service to be provided within the SEZ, as long as it is used exclusively for the SEZ unit's operation. Therefore, the appellant was deemed eligible for the exemption.

Issue 2: Interpretation of SEZ Act and Notification No. 4/2004
The Tribunal referred to a previous case involving event management services provided outside the SEZ unit, where it was established that services aiding the advertisement of SEZ products, even if conducted outside the SEZ, are considered consumed within the SEZ. The Tribunal highlighted the overriding effect of Section 51 of the SEZ Act, emphasizing that tax exemption benefits cannot be denied by narrowly interpreting Notification No. 4/2004. The Tribunal concluded that the denial of the benefit was unjustified and set aside the impugned order, allowing the appeal with consequential benefits.

Conclusion:
Based on the discussions and precedents, including the Tribunal's decision in a similar case, the appellant was found eligible for the exemption concerning the sponsorship service received from outside the SEZ. Consequently, the impugned order was set aside, and the appeal was allowed.

*( Pronounced in the open court on 31. 10. 2023 )*