2016 (3) TMI 231 - AT - Service Tax

Refund claim - Service Tax paid on specified services for authorized operation in SEZ - Revenue contended that appellant constructed a transmission line outside the SEZ area and supplies electric power to Domestic Tariff Area do not fulfill the criteria of wholly consumed services as defined in explanation (i), (ii) or (iii) to Para 2(a) of the notification and seem to be carrying a different business. - Held that - mere supply of surplus power in DTA as mentioned in Rule 47 of SEZ Rules, cannot be construed that the assessee carries on business, as there is no DTA Unit of the assessee. Apart from that, SEZ, Mundra, directed the assessee to claim refund in terms of Para 2(c) of the notification, then, rejection of refund claims considering under Para 2(d) of notification by the Adjudicating authority is totally unwarranted and cannot be sustained. As decided by the Tribunal in the case of Tata Consultlancy Services Ltd Vs CCE & S.T. (LTU), Mumbai - 2012 (8) TMI 500 - CESTAT, MUMBAI that 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 to their own findings in the matter. Decided against the revenue

Issues Involved:
1. Eligibility of refund claims for service tax paid on input services used in SEZ operations.
2. Whether the services were wholly consumed within SEZ.
3. Authority of Commissioner (Appeals) to remand cases.
4. Specific objections raised by the Assessee regarding rejection of refund claims.

Detailed Analysis:

1. Eligibility of Refund Claims for Service Tax Paid on Input Services Used in SEZ Operations:
The Assessee, approved as a Developer for a Power Sector Specific SEZ, claimed refunds for service tax paid on various input services used for authorized operations in SEZ. The services included Banking and Financial Service, Custom House Agent, Works Contract Service, Repair & Maintenance Service, Rent-a-cab Service, Manpower Recruitment, Air Condition Restaurant, Renting of Immovable Property, etc. The jurisdictional Deputy/Assistant Commissioner initially rejected these claims, arguing that the services were not wholly consumed within SEZ and did not meet the notification conditions. However, the Commissioner (Appeals) allowed the refund claims on merits, partly remanding some cases for document verification.

2. Whether the Services Were Wholly Consumed Within SEZ:
The Revenue contended that the Assessee engaged in both SEZ and DTA operations, thus the services could not be considered as wholly consumed within SEZ. The Assessee argued that they only carried out authorized operations within SEZ and did not have any DTA Unit. The Tribunal found no evidence of a DTA unit operated by the Assessee and ruled that the services used for authorized operations within SEZ were eligible for refund. The Tribunal emphasized that mere supply of surplus power to DTA as permitted by SEZ Rules does not constitute carrying out business in DTA.

3. Authority of Commissioner (Appeals) to Remand Cases:
The Revenue challenged the Commissioner (Appeals)'s authority to remand cases. The Tribunal referred to the Hon'ble High Court of Gujarat's decision in Commissioner of Service Tax Vs Associated Hotels Ltd, which upheld that the Commissioner (Appeals) has the power to remand matters for de-novo adjudication. Therefore, the Tribunal dismissed the Revenue's appeal on this ground.

4. Specific Objections Raised by the Assessee Regarding Rejection of Refund Claims:
The Assessee contested the rejection of refund claims on several grounds, including:
- Service of transport by air for domestic journeys not covered under the approved service category.
- Reimbursement of expenses.
- Services not consumed in relation to authorized operations.
- Lack of supporting documents or co-relation with submitted documents.
- Services wrongly classified.
- Service categories not approved at the time of refund claim but approved later.

The Tribunal noted that the Commissioner (Appeals) had already remanded some issues for verification and found it appropriate for the Adjudicating authority to examine these issues on merit during de-novo adjudication.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s decision to allow refund claims, rejected the Revenue's appeals, and remanded the Assessee's appeals for further examination by the Adjudicating authority. The Tribunal emphasized the importance of following SEZ Act and Rules, and the specific approvals granted to the Assessee for authorized operations within SEZ.

← Previous Next →