2024 (4) TMI 429 - AT - Service Tax

Exemption under N/N. 9/2009-ST dated 03.03.2009 as amended - service provided by a subcontractor to a unit located in SEZ - HELD THAT - It can be seen that there is no denying of the fact that services were provided by the appellant in the capacity of a subcontractor to a unit located in SEZ area and only argument on the basis of which the learned Adjudicating Authority has confirmed the demand of service tax only on the ground that when the service has been provided by a subcontractor to the contractor of the SEZ Unit, the subcontractor will not be entitled to benefit of notification even though services have been provided to a SEZ unit. Since the services rendered to a SEZ unit on behalf of a Contractor who has formally been authorised by SEZ Unit for providing certain goods and services to them, irrespective whether the services directly provided by the main contractor or the main contractor has appointed a subcontractor makes no difference since the service has been rendered to SEZ Unit, the benefit of exemption notification is available to the appellant. Reliance placed in Tribunal s decision in the case of SHYAM ENGINEERS VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA 2023 (10) TMI 1379 - CESTAT AHMEDABAD where it was held that there is no doubt in our mind that service provided by the appellant in the capacity of sub-contractor but in relation to the authorised operations in SEZ are clearly eligible for exemption Notification No. 9/2009-ST dated 03.03.2009 as amended. The substantial benefits of exemption notification cannot be denied merely on small infringement of procedural requirement - the impugned order set aside - appeal allowed.

Summary

Issues Involved:

1. Eligibility for exemption benefit u/s Notification No. 9/2009-ST for services provided by a subcontractor to a SEZ unit.
2. Requirement of furnishing declarations in Form A-1 and A-3 for availing exemption.
3. Applicability of service tax on services provided by subcontractors in SEZ.

Summary:

1. Eligibility for Exemption Benefit u/s Notification No. 9/2009-ST:

The appellant, a subcontractor, provided services to a SEZ unit and claimed exemption from service tax under Notification No. 9/2009-ST dated 03.03.2009. The Adjudicating Authority denied the exemption, arguing that it applies only to services provided directly by the main contractor to the SEZ unit. However, the Tribunal held that the exemption is available irrespective of whether the services are provided by the main contractor or a subcontractor, as long as the services are rendered to a SEZ unit. The Tribunal referenced various case laws, including *Shyam Engineers* and *Rishabh Construction Company*, supporting this view.

2. Requirement of Furnishing Declarations in Form A-1 and A-3:

The appellant contended that the requirement to furnish a declaration in Form A-1 was introduced by an amendment in Notification No. 9/2009-ST vide amendment No. 17/2011 dated 01.03.2011. Therefore, the demand for the period prior to March 2011 is unsustainable as there was no requirement for such a declaration before this date. The Tribunal agreed that substantive benefits provided by a notification cannot be denied due to procedural lapses.

3. Applicability of Service Tax on Services Provided by Subcontractors in SEZ:

The Tribunal emphasized that services provided in SEZ areas are exempt from service tax as per Section 26 of the SEZ Act, 2005. The Tribunal cited decisions in *Reliance Ports and Terminals Limited* and *DHL Lemuir Logistics Pvt. Limited*, which held that services provided in SEZ areas are exempt from service tax regardless of procedural compliance. The Tribunal concluded that the appellant, being a subcontractor, is entitled to the exemption as the services were provided to a SEZ unit.

Conclusion:

The Tribunal set aside the impugned order-in-original, allowing the appeal and confirming that the appellant is entitled to the exemption under Notification No. 9/2009-ST. The Tribunal reiterated that substantive benefits cannot be denied due to minor procedural lapses and that services provided in SEZ areas are exempt from service tax. The appeal was allowed, and the impugned order was declared without merit.