2016 (12) TMI 38 - AT - Service Tax

Denial of refund - SEZ unit - services consumed wholly by the appellant within SEZ within which it is situated - rent-a-cab services - outdoor catering services - Notification No.9/2009-ST as amended by Notification No.15/2009-ST - Held that - Doubtless, the Notification No.9/2009-ST as amended by Notification No.15/2009-ST provided for abinitio exemption from discharge of service tax liability by an SEZ unit in respect of authorized services consumed fully within the SEZ. This however, in my view, cannot disentitle such a unit of refund of the service tax liability discharged even when all such services have been consumed fully within the SEZ. It is further seen that list of specified services have been issued by Development Commissioner for authorized operations by the unit within MEPZ/SEZ in which disputed services viz. Rent-a-cab services, and Outdoor catering services are listed out at Sl.No.20 & 25 respectively. Thus, I find that the conditionalities in para (i) of Notification No.9/2009-ST, as amended, are satisfied. Reliance placed on the decision of the case of Intas Pharma Ltd. Vs CST Ahmedabad 2013 (7) TMI 703 - CESTAT AHMEDABAD , where it was held that Notification No. 9/2009-ST enable claim of exemption by developers or units in SEZ by way of refund of service tax paid for services used in relation to authorized operations in SEZ - insofar as the claim for refund is filed within six months or within such extended period as the AC or DC of Central Excise shall permit - provisions of the 2005 Act are provided an overriding effect vide Section 51 - the immunity to service tax in respect of taxable services provided in relation to SEZ is a legislatively enjoined immunity - any service tax paid/ remitted by a service provider is liable to be refunded to the provider who has remitted service tax in relation to taxable services provided to the unit to carry on authorized operations in a SEZ. I hold that the appellant is very much eligible for grant of refund in respect of services availed by them and consumed fully within the SEZ provided that said services are authorized by competent authority and they are not in dissonance with rule 2(l) of the CCR. In the instant case, there is no allegation that input services provided in relation to outdoor catering or rent-a-cab services are used primarily for personal use or consumption of any employee from the facts on record. They are provided by appellant to their employees which are in the nature of welfare activity. They are therefore are very much within the ambit of rule 2(l) of CCR 2004 for the purpose of eligible input services . No other disentitling factors are found in these cases. Hence all the appeals, in respect of services consumed wholly within the SEZ by appellant in respect of rent-a-cab services and outdoor catering services are allowed, with consequential benefit - appeal allowed.

Summary

Issues Involved:
1. Disallowance of refund for services consumed within SEZ.
2. Eligibility of specific services (Rent-a-Cab, Outdoor Catering) as essential input services for authorized operations.
3. Validity of invoices for services consumed within SEZ.
4. Interpretation of Notifications No. 9/2009-ST and No. 15/2009-ST.

Issue-wise Detailed Analysis:

1. Disallowance of Refund for Services Consumed within SEZ:
The primary issue in these appeals was the disallowance of refund claims for services consumed wholly within the Special Economic Zone (SEZ). The appellant argued that, according to Notification No. 9/2009-ST as amended by Notification No. 15/2009-ST, services consumed within SEZ should be exempt from service tax, and any tax paid should be refunded. The Tribunal found that the exemption provided in the notifications does not preclude the refund of service tax paid on services consumed wholly within the SEZ. This interpretation aligns with several Tribunal decisions, including Intas Pharma Ltd. Vs CST Ahmedabad and Reliance Ports and Terminals Ltd. Vs CCE & ST Rajkot.

2. Eligibility of Specific Services as Essential Input Services:
The appellant's claims included refunds for services such as Rent-a-Cab and Outdoor Catering. The Tribunal noted that these services were listed as authorized operations by the Development Commissioner for the SEZ and thus satisfied the conditions in Notification No. 9/2009-ST. The Tribunal referenced the case of Nokia Solutions and Networks India Pvt. Ltd., which held that once the Approval Committee permits such services, the refund of service tax paid is undeniable. The Tribunal concluded that these services, provided they are not primarily for personal use, fall within the ambit of Rule 2(l) of the Cenvat Credit Rules, 2004, making them eligible for refunds.

3. Validity of Invoices for Services Consumed within SEZ:
The appellant did not dispute certain disallowed amounts related to invoices for addresses other than SEZ and refund claims against credit notes. The Tribunal upheld the disallowance of these amounts, noting that invoices not eligible under Rule 4A cannot be considered valid documents for refund claims. This was consistent with the appellant's acknowledgment and the provisions of the relevant notifications.

4. Interpretation of Notifications No. 9/2009-ST and No. 15/2009-ST:
The Tribunal examined the interpretation of these notifications, which provide ab initio exemption from service tax for services consumed within SEZ. The Tribunal found that the notifications do not disqualify the refund of service tax paid on such services. The Tribunal emphasized the legislative intent to provide immunity from service tax for SEZ units and concluded that the procedural requirements in the notifications are meant to facilitate, not restrict, the refund process. This interpretation was supported by the Tribunal's decision in Intas Pharma Ltd., which clarified that the notifications contour the process of operationalizing the exemption without imposing additional disabilities.

Conclusion:
The Tribunal allowed the appeals, granting refunds for services consumed wholly within the SEZ, provided they are authorized by the competent authority and comply with Rule 2(l) of the Cenvat Credit Rules, 2004. The decision reaffirmed the eligibility of Rent-a-Cab and Outdoor Catering services for refunds, emphasizing that the legislative framework supports such exemptions and refunds. The Tribunal's judgment aligns with previous decisions, ensuring consistency in the interpretation and application of service tax exemptions for SEZ units.