2013 (2) TMI 562 - AT - Service Tax

Refund of service tax paid on services used in SEZ - denial of refund on Event Management, CHA Services, Management Consultancy, Commercial Training & Coaching Services, Testing, Management and Business Consultancy Service by overseas service provider, Maintenance & Repair Service as they were not in the approved list of services - Held that - The Approval Committee which has examined this issue has issued a specific certificate to the appellant indicating the various services received by the appellant and justification for use of such services in relation to authorized operations and the jurisdictional Commissioner of Central Excise is also a member of this Approval Committee. Once the Approval Committee has given the nexus and the justification, it was totally unwarranted on the part of the adjudicating authority and the appellate authority to go into this question and come lo their own findings in the matter. Therefore, rejection by the lower authorities of the refund claims of the service tax paid on various services on this grounds is bad in law and is accordingly set aside. Whether the appellants can be granted refund under Notification No.09/2009-ST dated 3.3.2009 as amended by Notification No.15/2009-ST dated 20.5.2009 - Held that - Notification No.09/2009-ST exempts the taxable services specified in Clause (105) of Section 65 of the Finance Act, 1994 provided in relation to the authorized operations in a SEZ and received by a developer or units of a SEZ, whether or not the said taxable services are provided inside the SEZ, from the whole of the service tax leviable thereon under Section 66 of the Finance Act, 1994. The refund procedure for operationalising the exemption applies to services which are procured from outside in respect of which the service tax liability has to be discharged first and the refund claim subsequently. In the case of services which are wholly consumed within the SEZ, there is no necessity to discharge the service tax liability ab initio. That does not mean that in a case where service tax liability has been discharged, the appellant is not eligible or not entitled for refund of the service tax paid under the provisions of Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. If the appellant is eligible for refund under Section 11B, then the same cannot be denied on the ground that the claim was made under Notification No.09/2009-ST. As in the present case there is no dispute that the services were provided in relation to the authorized operations of the appellant within the SEZ & the appellant has filed the refund claim within the tine period provided for in Section 11B and the appellant has borne the incidence of taxation. Services provided to a SEZ or unit in the SEZ is deemed as export as per the provisions of Section 2 (m) (ii) of the SEZ Act, 2005 and as per Rule 31 of the SEZ Rules, 2006, the appellants are entitled for exemption from payment of service tax on the services which are used or provided to a unit in the SEZ. Therefore, even if the appellant was not eligible for refund under Notification No.09/2009-ST dated 3.3.2009, the appellants were certainly eligible for refund under Section 11B of the Central Excise Act, 1944 - rejection of service tax refund is not sustainable in law - in favour of assessee.

Summary

Issues:
Refund claim denial for service tax paid on various services in SEZ.

Analysis:
The appeal was against the order denying refund on certain services procured in a Special Economic Zone (SEZ). The appellant sought a refund for service tax paid on services used for manufacturing pharma goods. The lower authorities allowed refund on some items but denied it on services like Event Management, CHA Services, Management Consultancy, and others, stating they were not wholly used in the SEZ and were not on the approved list. The adjudicating authority rejected the refund claim, upheld by the first appellate authority, leading to this appeal.

The appellant contended that all services were essential for SEZ activities, citing the list of approved services. The appellant's representative referenced previous tribunal decisions to support their case. The Departmental Representative highlighted specific reasons for denying refund on certain services, emphasizing the lack of evidence of direct nexus with SEZ activities.

The judge examined both parties' arguments and the records. The main issue was the denial of refund for services procured in SEZ for manufacturing and export. The Revenue objected, claiming the services were not on the approved list. However, upon reviewing the list, the judge found all disputed services were included. The judge also noted that the services in question were clearly provided and utilized in the SEZ unit, with no dispute over their consumption. Referring to precedent, the judge emphasized that if services were wholly consumed within the SEZ, the appellant could be eligible for a refund, even if the service tax was initially paid.

The judge further elaborated on the legal provisions governing SEZs and exports, emphasizing the entitlement of SEZ units to exemptions from service tax. The judge concluded that the denial of the service tax refund was not legally sustainable. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief.

In conclusion, the judgment focused on the denial of a refund claim for service tax paid on various services in an SEZ. The judge analyzed the list of approved services, the consumption of services within the SEZ, and the legal provisions governing SEZs and exports to determine the appellant's eligibility for a refund. Ultimately, the judge set aside the impugned order and allowed the appeal, providing consequential relief to the appellant.