2020 (4) TMI 77 - AT - Service Tax

Refund of service tax - SEZ unit - Time limitation - Exemption from payment of service tax under Section 26 (1)(e) read with 51 of SEZ Act, 2005 - appellant-assessee a developer in the SEZ - HELD THAT - Relying on the precedent decisions of this Tribunal, particularly in the case of M/S. INTAS PHARMA LIMITED VERSUS COMMISSIONER OF SERVICE TAX AHMEDABAD 2013 (7) TMI 703 - CESTAT AHMEDABAD , It is held that the ab initio exemption provided under the SEZ provisions, having over riding effect on the service tax provision. Under such position of law, a notification under service tax cannot restrict or provide a time limit for grant of refund to the SEZ unit and developer. Accordingly, impugned orders are set aside and appeals are allowed. The adjudicating authority are directed to grant the refund within a period of 45 days from the date of receipt of this order alongwith interest - appeal allowed.

Summary

Issues:
- Whether the appellant, a developer in the SEZ, is fully exempt from service tax under the SEZ Act, 2005.
- Whether the denial of refund of service tax on the ground of limitation is justified.

Analysis:
1. Exemption under SEZ Act: The issue revolves around whether the appellant, being a SEZ developer, is entitled to exemption from payment of service tax under Section 26(1)(e) read with Section 51 of the SEZ Act, 2005. The notification under Section 93(1) of the Finance Act, 1994, grants exemption from service tax to SEZ units and developers. The appellant filed refund claims based on this exemption, which were subsequently denied on the ground of being time-barred.

2. Time Barred Refund Claims: The Assistant Commissioner found the refund claims to be time-barred as per para 3(iii)(e) of Notification No. 12/2013. This led to the issuance of a show cause notice denying the refund on the grounds of limitation. The refund claims were adjudicated separately, resulting in denial based on Section 11B of the Central Excise Act.

3. Legal Precedents and Interpretation: The appellant argued that the ab initio exemption under the SEZ provisions overrides the service tax provisions. Citing legal precedents such as Intas Pharma Ltd. vs. Commissioner of Service Tax, Ahmedabad, the appellant contended that a notification under service tax cannot restrict or impose time limits on granting refunds to SEZ units and developers. The Tribunal, relying on the precedent decisions, held that the SEZ provisions have overriding effect on service tax provisions, entitling the appellant to refund without time restrictions.

4. Tribunal's Decision: Considering the arguments and legal precedents, the Tribunal set aside the impugned orders and allowed the appeals. The Tribunal held that the ab initio exemption provided under the SEZ provisions prevails over the service tax provisions, concluding that a notification under service tax cannot impose time limits on refund grants to SEZ units and developers. The Tribunal directed the adjudicating authority to grant the refund within 45 days from the date of the order, along with interest as per rules.

In conclusion, the judgment clarifies the entitlement of SEZ developers to exemption from service tax under the SEZ Act, emphasizing the overriding effect of SEZ provisions on service tax provisions. The decision highlights the importance of legal precedents in interpreting and applying tax exemption laws, ensuring that SEZ units and developers receive their entitled refunds without time restrictions.