2018 (4) TMI 672 - AT - Service Tax

Refund claim - services received by them in their Unit - rejection on the ground that the services were wholly consumed in SEZ and hence not eligible for refund - Held that - From the provisions contained in Section 26(1)(e) of the SEZ Act, read with Rule 30(10) of the SEZ Rules, 2006, it can be seen that no service tax is payable on the services provided by a service provided to a SEZ unit. Further, Sec. 51 of the SEZ Act also makes an over-riding provision that SEZ Act shall have effect even if there is anything inconsistent contained in any other law for the time being in force or in any instrument having effect by virtue of any other law. N/N. 9/2009-S.T. and amended N/N. 15/2009-S.T. have been only issued to operationalize the exemption/ immunity available to SEZ unit under Sec. 26(1)(e) of the SEZ Act, 2005 and cannot bar the refund claim to the Appellant. The refund of service tax sought by Appellant cannot be rejected on the ground that the services were wholly consumed in SEZ and the Appellants are eligible for the refund. Some of the claim amount was rejected on the ground of excess claim in case of some invoices and that some of the invoices are not in Appellant s name or minor discrepancy. In such circumstances it is fit to remand the case back to the adjudicating authority to grant refund where the invoices were not in name of Appellant - appeal allowed by way of remand.

Summary

Issues:
1. Eligibility for refund of service tax under SEZ Act and SEZ Rules.
2. Interpretation of Notification No. 9/2009 - ST regarding refund claims.
3. Discrepancies in refund claim invoices and rejection on grounds of excess claim.

Analysis:

Issue 1:
The case involved appeal Nos. ST/ 714/11 and ST/ 715/11 concerning the eligibility of an SEZ unit for a refund of service tax under the SEZ Act and SEZ Rules. The Appellant, engaged in exporting software-related services, sought a refund of service tax under Notification No. 9/2009 - ST. The dispute arose when the authorities rejected the refund claim on the grounds that services were wholly consumed in the SEZ, making them ineligible for a refund. However, the Tribunal held that the SEZ Act provisions override the Notification, as per Section 26(1)(e) of the SEZ Act and Rule 30(10) of the SEZ Rules. The Tribunal referred to previous judgments to support the view that the Appellant is entitled to the refund under the SEZ Act, despite the services being consumed within the SEZ.

Issue 2:
The interpretation of Notification No. 9/2009 - ST was a crucial aspect of the case. The Appellant argued that the impugned order exceeded the scope of the show cause notice by rejecting the refund claim based on the consumption of services within the SEZ. The Appellant relied on the Toyo Engineering case and emphasized that the show cause notice did not allege that services were wholly consumed in the SEZ. The Tribunal agreed with the Appellant, stating that the Notification was issued to operationalize the exemption available under the SEZ Act and should not bar the refund claim. The Tribunal cited relevant Tribunal decisions to support the Appellant's position and concluded that the refund should not be denied based on technical or procedural lapses.

Issue 3:
Regarding discrepancies in the refund claim invoices and rejection on grounds of excess claim, the Tribunal acknowledged that some claim amounts were rejected due to excess claims and minor discrepancies in the invoices. As a result, the Tribunal decided to remand the case back to the adjudicating authority to address these specific issues. The Tribunal set aside the impugned order and allowed the appeals by remanding the case to the adjudicating authority for further consideration.

In conclusion, the Tribunal's judgment clarified the eligibility of the SEZ unit for a refund of service tax under the SEZ Act and SEZ Rules, interpreted Notification No. 9/2009 - ST in favor of the Appellant, and addressed discrepancies in the refund claim invoices by remanding the case for further review by the adjudicating authority.