2022 (6) TMI 676 - AT - Service Tax

SEZ unit - Refund of Service Tax - Service Tax paid on Banking and Other Financial Services - rejection of refund on the ground that the provisions of the Notification No.12/2013-ST dated 01.07.2013, Notification No.17/2011-ST dated 01.03.2011 and Notification No.40/2012-S.Tax dated 20.06.2012 have not been properly followed - proper document admissible in terms of said notification - HELD THAT - The documents submitted by the claimant relating to banks which are not signed by any the banks Authority the Computer Generate Advice of Foreign Import Bill Transaction Advice for CUSTID; 507991965/Foreign Remittance Advice for CUSTID; 507991965/Import Letter of Credit Issuance Advice/Debit Advice for outward Remittance of the aforesaid document can be obtained as many times as they like and utilization of the same in different occasion cannot be ruled out - the benefit of Notification No.12/2013-ST dated 01.07.2013, Notification No.17/2011-ST dated 01.03.2011 and Notification No.40/2012-S.Tax dated 20.06.2012 can be availed in either way i.e. the service provider may not tax the amount or the service recipient being SEZ can claim refund. Mere technical discrepancy in the invoices cannot be the ground for denying substantive benefit of refund available to SEZ unit. It is the policy of the Government to exempt or refund the input tax incurred by the SEZ unit. Keeping the policy of the Government in mind and specifically in the light of section 7 and section 51 of the SEZ Act, 2005, it is found that denial of refund claim on this ground is not sustainable - Regarding re-conciliation of Service Tax payment with evidence of challans, it is found that the same was produced before the lower authority and the same is satisfactory. If the service recipient is a SEZ unit, they should pay Service Tax to the service provider and claim the refund of the amount. In the case in hand, the fact that the appellant is SEZ unit is not disputed and the receipt of the services is also not disputed as also the payment of Service Tax to the service provider. In the absence of any adverse findings on these issues, it is found that the appellant herein is eligible for claiming refund of the Service Tax paid by the service provider which is in consonance with the law. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Rejection of refund claims for Service Tax paid on "Banking and Other Financial Services."
2. Compliance with Notifications No.12/2013-ST, No.17/2011-ST, and No.40/2012-ST.
3. Validity of computer-generated, unsigned tax-paying documents.
4. Consideration of SEZ unit status and entitlement to refunds.
5. Application of Rule 4A of the Service Tax Rules.
6. Alleged non-application of mind by the Appellate Authority.

Issue-wise Detailed Analysis:

1. Rejection of Refund Claims for Service Tax Paid on "Banking and Other Financial Services":
The appellant, an SEZ unit, claimed refunds for Service Tax paid on services received from various banks. The lower authorities rejected these claims, citing improper documentation and non-compliance with specific notifications. The Tribunal found that the appellant had indeed paid the Service Tax and was entitled to refunds as the services were used within the SEZ unit.

2. Compliance with Notifications No.12/2013-ST, No.17/2011-ST, and No.40/2012-ST:
The appellant's claims were initially rejected due to alleged non-compliance with the aforementioned notifications. The Tribunal noted that the appellant had adhered to the provisions of these notifications, and the discrepancies cited were technical rather than substantive. The Tribunal emphasized that the notifications allow for either non-taxation by the service provider or a refund claim by the SEZ unit.

3. Validity of Computer-Generated, Unsigned Tax-Paying Documents:
The rejection of claims was partly based on the use of computer-generated, unsigned documents from banks. The Tribunal ruled that these documents should be accepted under Rule 4A of the Service Tax Rules, which allows for flexibility in the format of invoices from banking and financial institutions. The Tribunal found that the documents submitted were sufficient to substantiate the refund claims.

4. Consideration of SEZ Unit Status and Entitlement to Refunds:
The Tribunal highlighted the appellant's status as an SEZ unit, which entitles it to specific benefits, including refunds of Service Tax paid on eligible services. The Tribunal referred to the policy of the Central Government and the provisions of the SEZ Act, 2005, which support the appellant's entitlement to refunds. The Tribunal found that the lower authorities had overlooked these critical aspects.

5. Application of Rule 4A of the Service Tax Rules:
The Tribunal noted that Rule 4A provides that documents from banking institutions need not be serially numbered or contain the recipient's address, as long as they include other required information. The Tribunal found that the lower authorities had failed to consider this rule, leading to an unjust rejection of the refund claims.

6. Alleged Non-Application of Mind by the Appellate Authority:
The Tribunal observed that the impugned orders were verbatim reproductions of the Orders-in-Original, indicating a lack of independent consideration by the Appellate Authority. The Tribunal criticized this approach, stating that it demonstrated a failure to apply judicial mind and consider the appellant's grounds of appeal. The Tribunal set aside the impugned orders on this basis.

Conclusion:
The Tribunal concluded that the appellant, being an SEZ unit, was entitled to the refunds claimed. The technical discrepancies cited by the lower authorities were insufficient grounds for denial. The Tribunal emphasized the policy of the government to support SEZ units and found that the appellant had met all substantive requirements for the refund. Consequently, the Tribunal set aside the impugned orders and allowed the appeals with consequential relief.

Order Pronounced:
The order was pronounced in the open court on 08 June 2022, setting aside the impugned orders and allowing the appeals with consequential relief in accordance with the law.