2024 (5) TMI 73 - AT - Service Tax

Exemption from Service tax - services provided to SEZ units - conditions of N/N. 9/2009-ST dated 31.03.2009, N/N. 17/2011-ST dated 01.03.2011, N/N. 40/2011-ST dated 20.06.2011 and N/N. 12/2013-ST dated 01.07.2013 fulfilled or not - It is the case of the Appellant that since all the documents were resumed by the Officers of Service Tax Department at the time of search of the premises of the Appellant on 13.01.2015, including A-1 Forms also, the Appellant could not produce the same before the learned Commissioner (Appeals). HELD THAT - There is no dispute that the services have been provided to SEZ units ; SEZ units to whom services have been provided were duly authorized by UAC to receive certain services without payment of Service Tax for use in the authorized operations ; SEZ units were issued duly approved list of specified services in proper prescribed form ; there is no dispute that the services provided by the Appellant were used in authorized operations of recipient SEZ units. The Hon'ble Supreme Court has consistently held that the eligibility clause of exemption Notification has to be given strict meaning of which the Notifications should be interpreted in terms of its language and once an Assessee satisfies the eligibility clause, the exemption clause may be construed liberally. Thus, an eligibility criteria deserves a strict construction, although construction of a condition thereof may be given a liberal meaning - Hon ble Supreme Court in the case of COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. 2018 (7) TMI 1826 - SUPREME COURT held that 'If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, thought at times, some latitude can be shown, if there is failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption.' Since there was substantial compliance of substantive clause of the Notifications in question, the Appellant is entitled to exemption from payment of Service Tax in respect of services provided by the Appellant to SEZ units/Developers - the impugned order is set aside - appeal allowed.

Summary

Issues Involved:

1. Whether the Appellant is entitled to exemption from payment of Service Tax for services provided to SEZ units.
2. Whether the extended period of limitation is invocable.
3. Compliance with the conditions of exemption notifications.

Summary:

1. Entitlement to Exemption from Service Tax:

The Appellant argued that services provided to SEZ units were exempt from Service Tax as they were used in authorized operations of SEZ units, which were duly authorized by the UAC. The Department contended that SEZ units engaged in various activities required approval from the Board of Approval (BOA) or UAC to be eligible for exemption. The Tribunal found that the Appellant had substantial compliance with the substantive clause of the Notifications, thus entitling them to exemption from Service Tax for services provided to SEZ units.

2. Extended Period of Limitation:

The Appellant submitted that all transactions were reflected in their Books of Accounts and Balance Sheets, which were available on the Registrar of Companies' website. Therefore, the extended period of limitation was not invocable. The Tribunal did not explicitly address this issue in the final judgment but focused on the compliance with exemption conditions.

3. Compliance with Conditions of Exemption Notifications:

The Tribunal noted that the learned Commissioner relied on various Notifications and a CBEC Circular to deny exemption, citing non-fulfillment of conditions such as obtaining UAC approval and maintaining proper accounts. The Appellant claimed they procured Form A-1 from SEZ units before providing services and that documents were seized during a search. The Tribunal found that almost all conditions of the Notifications were to be fulfilled by SEZ units and developers, and the Appellant had procured necessary approvals. Therefore, the Tribunal concluded that there was substantial compliance with the substantive clause of the Notifications.

Conclusion:

The Tribunal held that since there was substantial compliance with the substantive clause of the Notifications, the Appellant was entitled to exemption from payment of Service Tax for services provided to SEZ units. The impugned order was set aside, and the appeal filed by the Appellant was allowed.