2022 (6) TMI 821 - AT - Service Tax

Refund of service tax - Appellant has one unit in SEZ and on in DTA - rejection of refund claim on the ground that the service of marketing on which the refund claim was made is not listed in approved list of the approval committee for the Special Economic Zone - it is also alleged that the appellant and the service provider are one entity hence, it cannot be said that the appellant have received the services from the service provider - HELD THAT - The Learned Commissioner (Appeals) have denied the refund on the ground that first the service is not included in the approved list, and secondly, the service provider and service recipient both are the same entity. It is found that as regard the inclusion of service in the approved list firstly, the invoice issued by the service provider is clearly in respect of Business Support Service - From the above approved list, it is clear that the Business Support Service is clearly included in the list approved by the approval committee. It is also found that even if it is assumed that the service falls under marketing service and same is not included in the approval list even then for this being a procedure lapse refund cannot be denied. It is also found that even if it is assumed that the service falls under marketing service and same is not included in the approval list even then for this being a procedure lapse refund cannot be denied. There is no dispute that the appellant s service provider is located in Kolkata which is a DTA unit and the appellant s unit is located in SEZ. As per Sub Rule (7) of Rule 19 of the Special Economic Zone Rules, 2006 it clearly provides that if an enterprise is operating both as Domestic Tariff Area Unit as well as a Special Economic Zone Unit, it shall have two distinct identities with separate books of account, but it shall not be necessary for Special Economic Zone unit to be a separate legal entity. With this clear provision under the Special Economic Zone Rules even if the appellant is not a separate legal entity, the unit being located in SEZ shall be treated as distinct identity, therefore, the denial of refund on this ground also not tenable. The appellant is clearly entitled for the refund under Notification No. 12/13-ST dated 01.07.2013 - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Whether the appellant is entitled to a refund under Notification No. 12/13-ST dated 01.07.2013 read with Section 11B of Central Excise Act, 1944 during January 2017 to March 2017.

Analysis:
The issue in this case revolves around the entitlement of the appellant to a refund under specific regulations during a specified period. The Learned Commissioner (Appeals) upheld the rejection of the refund claim citing reasons that the service of marketing for which the refund was claimed was not listed in the approved list of the approval committee for the Special Economic Zone. Additionally, it was argued that since the appellant and the service provider were considered one entity, the appellant could not be said to have received services from the provider. The appellant challenged this decision through the present appeal.

Appellant's Argument:
The appellant's counsel argued that the appellant had entered into an agreement with a holding company for receiving Business Support Service, which was utilized to expand business operations internationally. It was contended that the services provided fell under the definition of "Support Services of Business and Commerce," specifically under the category of "operational assistance for marketing." Invoices were issued by the service provider to the appellant for 'Business Support Service,' indicating that the services were indeed received. The appellant emphasized that both units had separate registrations and should be treated as distinct entities. The counsel also argued that even if the service was not included in the approved list, it should not result in the denial of the refund, citing various judgments in support of this position.

Revenue's Argument:
The Authorized Representative for the Revenue reiterated the findings of the impugned order, stating that the appellant's service did not fall under Business Support Service but was categorized as marketing service, which was not approved. It was further highlighted that since both the service provider and recipient were part of the same entity, the appellant could not be deemed to have received any service, thereby justifying the rejection of the refund claim.

Judgment:
Upon careful consideration of the submissions and records, the Tribunal found that the service in question was indeed Business Support Service, which was included in the approved list by the approval committee. Even if the service could be construed as marketing service, the Tribunal held that a procedural lapse in not including it in the approved list should not lead to the denial of a refund. Citing precedents, the Tribunal emphasized that the Special Economic Zone Rules treated units within the same enterprise differently, allowing for separate identities even if not separate legal entities. Consequently, the denial of the refund on the grounds of service approval and entity identity was deemed unsustainable. The Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the impugned order.

This comprehensive analysis delves into the core issues, arguments presented by both parties, and the Tribunal's detailed reasoning leading to the final judgment in favor of the appellant.