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2015 (2) TMI 146 - AT - Service TaxRejection of refund claims - whether the refund is admissible to the appellant, an SEZ unit, in respect of Service Tax paid on input services i.e. Telecommunication services, Management or Business Consultants services, Information Technology Software services, Business Support services - Notification No. 9/2009-S.T. dated 3 rd March, 2009 as amended by Notification NO. 15/2009-S.T. dated 20th May, 2009 - Held that - SEZ Act 2005, under Section 26 (i) (e), provides that all services imported into the SEZ to carry on authorised operations in SEZ shall be exempted. Further Section 51 of this Act gives overriding effect over other Acts. This being the legal position, the condition of Notification No. 15/2009 that refund is only admissible to services which are not wholly consumed within the SEZ cannot nullify the overriding provisions of Section 51 of the SEZ Act. The law makers made different schemes, one for granting refund of tax paid on services exported into SEZ and, the other for granting outright exemption to services which are provided to be wholly consumed within the SEZ. If the service provider pays Service Tax on the service provided to an SEZ unit, the recipient is bound to get refund unless assessment at the end of service provider was re-opened and refund was given to the service providers. - Decided in favour of assessee.
Issues:
Refund admissibility for SEZ unit on Service Tax paid for input services - Telecommunication, Management Consultants, IT Software, Business Support services under Notification No. 9/2009-S.T. Whether services wholly consumed within SEZ affect refund eligibility. Analysis: The judgment concerns appeals challenging rejection of refund claims by the Commissioner (Appeals) for an SEZ unit regarding Service Tax paid on input services. The main issue revolves around the admissibility of refund under Notification No. 9/2009-S.T. The Revenue contends that refund can only be granted if services are not wholly consumed within the SEZ. The appellant argues that since services were utilized for authorized operations, the payment of Service Tax by vendors makes it refundable. They rely on Section 51 of the SEZ Act, asserting that the SEZ Act's provisions override other Acts, hence tax not payable under the SEZ Act cannot be demanded under Service Tax Law. They cite precedents supporting their stance. The Appellate Tribunal examines the notifications providing exemption to taxable services for SEZ units. It notes that the SEZ Act exempts all services imported into the SEZ for authorized operations and gives overriding effect over other Acts. The Tribunal emphasizes that the condition of refund admissibility under Notification No. 15/2009, which excludes services wholly consumed within the SEZ, cannot nullify the SEZ Act's overriding provisions. The Tribunal highlights the different schemes for refund and exemption based on service consumption within the SEZ. It references a Supreme Court decision supporting the recipient's right to refund if Service Tax was paid by the service provider to an SEZ unit. The judgment further clarifies that once refund is provided under Notification No. 9/2009, the overriding authority under Section 11(B) of the Central Excise Act comes into play, preventing denial of refund for procedural infractions. The Tribunal rejects the argument that the appellant's practice of managing various units outside the SEZ to encash unutilized CENVAT Credit violates legal frameworks. It distinguishes the case of Everest Industries Ltd., where refund claims were rejected, noting the variance in facts. Ultimately, the appeals are allowed with consequential relief granted, emphasizing the recipient unit in the SEZ should not bear the tax incidence, and the legal framework supports the refund eligibility in this case.
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