2016 (9) TMI 842 - AT - Service Tax

Refund claim - Notification No. 40/2012-S.T. - SEZ unit - service tax discharged by them under Reverse Charge Mechanism for the services rendered by an entity situated abroad or otherwise - period involved is April, 2013 to June, 2013 - Held that - it is undisputed that appellant, SEZ, has one of the director of the board who is a citizen of foreign country, various payments such as insurance premium are paid abroad and appellant reimbursed such insurance premium. It is also undisputed that the appellant has discharged the services tax liability in Reverse Charge Mechanism. It is found that the claim of the learned counsel that services rendered would fall under the category of Business Auxiliary Services is already addressed by the adjudicating authority as well as first appellate authority and I find no reason to disagree with such findings of the first appellate authority. Hence, appellant has not listed any other services with the Development Commissioner for their authorized operations, in the absence of any permission from the Development Commissioner to use said services, the discharging the service tax liability, would not automatically entail availment of Cenvat credit. - Decided against the appellant

Summary

Issues Involved:
Refund claim under Notification No. 40/2012-S.T. for service tax paid on input services used for operation - Eligibility for refund under Reverse Charge Mechanism for services rendered by an entity situated abroad.

Detailed Analysis:

Issue 1: Refund Claim under Notification No. 40/2012-S.T.
The appellant filed a refund claim of &8377; 13,56,484 under Notification No. 40/2012-S.T. for service tax paid on input services used for their operation from April 2013 to June 2013. The adjudication authority sanctioned a refund of &8377; 1,02,678 and rejected the remaining amount. The first appellate authority modified the refund order, accepting the contention of the appellant for a further refund of &8377; 5,44,949. However, the refund claim of &8377; 7,66,804 was rejected. The key argument was that the services for which the tax was paid fell under "Business Auxiliary Services" and as the appellant was a unit in SEZ, no tax liability arose.

Issue 2: Eligibility for Refund under Reverse Charge Mechanism
The main issue to be decided was whether the appellant was eligible for a refund of &8377; 7,66,804 in relation to the service tax paid under Reverse Charge Mechanism for services rendered by an entity situated abroad. The appellant had one foreign director on the board, and payments such as insurance premiums were made abroad, which were later reimbursed by the appellant. The appellant had discharged the service tax liability under the Reverse Charge Mechanism.

The findings revealed that the service claimed by the appellant did not fall under "Business Auxiliary Services" as per the approved list by the Development Commissioner. The appellant had not listed the services with the Development Commissioner for their authorized operations, which led to the denial of the refund claim. The judgment emphasized that without permission from the Development Commissioner to use the said services, discharging the service tax liability would not automatically entail availment of Cenvat credit.

In conclusion, the appeal was rejected, and the impugned order was upheld, emphasizing the importance of complying with the approved list of services by the Development Commissioner for SEZ operations.

This detailed analysis of the legal judgment highlights the issues involved, the arguments presented, and the final decision rendered by the tribunal, providing a comprehensive understanding of the case.