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2024 (9) TMI 1076 - AT - Service TaxTime limitation - suppression of facts or not - Eligibility for exemption under SEZ Rules 2006 - providing security services to M/s Larsen Toubro Limited and availed the exemption eligible under Rule-10 of the SEZ Rules, 2006 - HELD THAT - The appellant in their ST-3 returns for the period April to September 2010 declared the value towards exempted service which is in respect of service provided in the SEZ. The appellant had a bonafide belief that service provided in SEZ as sub-contractor is exempted under N/N. 9/2009-ST, as amended vide N/N. 17/2011-ST. Since the appellant have declared in the ST-3 return the value of exempted service which is subject matter of the present appeal, there is no suppression of fact on the part of the appellant. Moreover, the appellant had strong prima-facie case on merit also therefore bonafide belief of the appellant cannot be doubted. There is no malafide intention in non-payment of service tax in respect of service provided in SEZ. Accordingly, the demand is not sustainable on the ground of time-bar itself. Hence, the impugned order is set-aside - Appeal allowed.
Issues:
1. Eligibility for exemption under SEZ Rules 2006. 2. Interpretation of provisions for services in SEZ area. 3. Time-bar for demand of service tax. Eligibility for exemption under SEZ Rules 2006: The appellant, engaged in providing taxable services as a sub-contractor in the SEZ area, availed an exemption under Rule-10 of the SEZ Rules 2006 for services provided to a specific entity. However, it was found that the exemption did not conform to the conditions specified under the Rules. Consequently, a Show Cause Notice was issued, leading to the demand of service tax, interest, and imposition of penalty by the Adjudicating Authority. The appellant contended that the deficiency in compliance was procedural and did not warrant denial of the exemption. The appellant argued that being a registered service provider filing regular returns, there was no intention to evade payment of service tax. Citing relevant judgments, the appellant asserted that the demand was not sustainable. Interpretation of provisions for services in SEZ area: The appellant argued that the issue at hand pertained to the interpretation of provisions related to services provided in the SEZ area. The appellant maintained that there was no malafide intention to evade service tax and emphasized that the benefit of exemption for services in the SEZ area should not be denied due to procedural deficiencies. The appellant's counsel referenced various judgments to support the contention that the demand was not valid. Time-bar for demand of service tax: Upon careful consideration of submissions and records, the Tribunal found that the appeal could be disposed of based on the ground of time-bar. The appellant had declared the value of exempted services in their returns, indicating a bonafide belief that services provided in the SEZ area were exempt under specific notifications. The Tribunal noted that there was no suppression of facts by the appellant and that there was a strong prima facie case on merit. As a result, the Tribunal concluded that there was no malafide intention in the non-payment of service tax for services in the SEZ area, rendering the demand unsustainable on the grounds of time-bar. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.
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