2018 (6) TMI 661 - AT - Service Tax

SEZ unit - Refund of service tax paid - Renting of Immovable Property Service - refund claim was rejected stating the reason that Renting of Immovable Property Services was not approved services on the date of filing of refund claim - Held that - It is not disputed that Renting of Immovable Property Service was availed by the appellant for the disputed period. The invoices shows the payment of service tax on such services. The Approval Committee has approved such services vide their letter dt.15/9/2009. The requisite for obtaining approval is only a procedure to be complied, for the substantive benefit of exemption from payment of service tax. When the services have been approved, the benefit of exemption cannot be denied. Section 26 of the SEZ Act, lays down provisions for exemption from duties and taxes. Section 51 of the said Act provides for over riding effect. Therefore the immunity provided from paid service tax cannot be taken away by the procedural prescriptions of Notification No.9/2009 or 15/2009. Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility for refund of service tax paid on Renting of Immovable Property Service under SEZ
- Interpretation of Notification No. 9/2009 and 15/2009 regarding approval of services for exemption
- Application of SEZ Act provisions on exemption from duties and taxes
- Consideration of procedural lapses in claiming refund

Analysis:

1. Eligibility for Refund of Service Tax on Renting of Immovable Property Service: The issue at hand was whether the appellant, a SEZ unit, was entitled to a refund of service tax paid on Renting of Immovable Property Service. The original authority rejected the refund claim citing non-approval of these services by the Development Commissioner at the time of filing the claim. However, it was established that the services were eventually approved, and the appellant had availed these services during the disputed period. The invoices reflected the payment of service tax on these services, and the Approval Committee approved them later. The Tribunal held that once the services were approved, the benefit of exemption could not be denied, emphasizing that the procedural requirement for approval should not override the substantive benefit of exemption.

2. Interpretation of Notification No. 9/2009 and 15/2009: The Tribunal delved into the provisions of Notification No. 9/2009 and its amendment by Notification No. 15/2009 concerning the approval of services for exemption under SEZ. It was noted that the appellant had initially requested approval for 106 services, but only 37 were approved initially, which were more of a general list applicable to all SEZ units. Subsequently, the Development Commissioner approved the list, including Renting of Immovable Property Services. The Tribunal emphasized that the purpose of these notifications was to enable recipients of taxable services in SEZ to benefit from service tax exemption, and any procedural lapses should not hinder the substantive benefit.

3. Application of SEZ Act Provisions: The appellant's counsel argued that Section 26 of the SEZ Act, 2006 provided for exemption from duties and taxes, with Section 51 stating the overriding effect of the Act over other laws. Relying on a previous decision, the counsel contended that the immunity from paid service tax could not be negated by procedural requirements of the notifications. The Tribunal agreed, holding that the substantive benefit of exemption should not be denied due to procedural lapses.

4. Consideration of Procedural Lapses: The Tribunal acknowledged a procedural lapse regarding certain invoices not containing necessary particulars, but since it was a minor amount that the appellant did not contest, it was not a significant issue in the appeal. The Tribunal focused on the substantive entitlement to refund based on the approval of services and the overarching principles of the SEZ Act.

In conclusion, the Tribunal found the denial of the refund unjustified and held that the appellants were indeed eligible for the refund. The appeal was allowed, granting the appellants the refund with consequential reliefs, if any.