2019 (4) TMI 1693 - AT - Service Tax

100% SEZ - Refund of service tax - input services - business auxiliary service - refund denied on the ground that the said service is not mentioned in the list of specified service approved by the approval committee for the authorized operation under SEZ - HELD THAT - Perusal of sub-clause (iii) (a) of the Notification makes it clear that the refund shall be allowed on the service tax paid on the specified service that are common to the authorized operations in SEZ - No doubt, the service was not approved at the time it was rendered, but the requisite ingredient for claiming refund as per the aforesaid clause is the time when service tax for the specified service is paid. The service tax was paid after the business support service, as received by the appellant, was categorized as specified service. Since, it was exclusively for authorized operations, the appellant was otherwise entitled for ab initio exemption but for the service to be specified later than the period during which it was received. Since the liability under reverse charge mechanism was discharged only after approval, the period during which the service was rendered is not relevant for claiming the benefit of this Notification. There is no lacuna on part of the appellant while claiming the refund except for a procedural lapse. It has been settled law that substantive benefit as that of tax exemption irrespective by way of refund cannot be denied merely due to the procedural lapse. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection under Notification No.12/2013 for service tax paid on specific services for SEZ unit.

Analysis:
The case involves a 100% SEZ Unit filing a refund claim for service tax paid on various services under Notification No.12/2013. The Department rejected a portion of the claim related to business auxiliary service not approved for SEZ operations. The appellant argued the services were business support services, acknowledged by authorities, and eligible for refund. The Department contended that business support service was not specified during the relevant period, making the refund inapplicable. The Tribunal analyzed Notification No. 12 and emphasized that the refund is granted for specified services exclusively used for authorized operations. The appellant paid tax on the service post-approval as a specified service, justifying the refund claim.

The Tribunal noted that the service was exclusively for authorized operations and paid after being approved as a specified service. Referring to case law, the Tribunal highlighted that the date of service rendering is immaterial for claiming the refund under the Notification. The Tribunal cited a case where obtaining approval post-refund claim did not disentitle the refund, similar to the present case where the service was approved after the refund claim. The Tribunal emphasized that substantive tax benefits cannot be denied for procedural lapses, ultimately setting aside the order against the appellant and allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the eligibility for refund based on the service being approved as specified post-payment of tax. The decision highlighted that procedural lapses should not hinder substantive tax benefits, aligning with established legal principles and precedents.