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2023 (9) TMI 196 - AT - Service TaxRefund of service tax - services used in authorized operations in SEZ during the period October 2010 to December 2010 - whether the claim for refund made in terms of the notification No 9/2009-ST dated 03.03.2009 can be denied just for the reason that the the taxable services in respect of the which the claim has been made, are not mentioned in the list of specified services approved by the SEZ authorities - HELD THAT - The scheme of SEZ Act, provides for exemption from payment of all taxes to the developer of SEZ or the Units operating in the SEZ. Notification No 9/20009-ST does not provide for any further exemption but provides a mechanism for operation of the said scheme, where a service provider has provided the taxable services to the Unit located in SEZ, on payment of service tax. The conditions specified in the sad notification need to be read accordingly. Article 265 of the Constitution clearly lays down that No taxes can be levied without the authority of law. When the developer of SEZ and units located in the SEZ have been given exemption from payment of all the taxes then any levy and collection of the taxes from such units is without any authority in law and thus contravenes the Article 265. In such a scenario, the amount so collected needs to be refunded to the person from whom such tax has been collected. In the present case revenue has not disputed the receipt of these services by the SEZ Unit, hence denial of the refund claim in respect of these three services for the reason that they did not find mention in the list of specified services approved by the SEZ authority cannot be upheld. The issue involved in the present appeal is no longer res-integra. Similar view has been expressed by the tribunal in M/S. METLIFE GLOBAL OPERATIONS SUPPORT CENTER PRIVATE LIMITED VERSUS COMMISSIONER, SERVICE TAX 2020 (12) TMI 1069 - CESTAT NEW DELHI where it was held that Learned counsel for the appellant submitted the substantive benefit of the service tax exemption provided under section 26 of the SEZ Act and rule 31 of the SEZ Rules cannot be denied by any procedural requirement under a notification - This submission of learned counsel for the appellant deserves to be accepted. There are no merits in the impugned order and the same is set aside - appeal allowed.
Issues Involved:
1. Whether the impugned order has traveled beyond the show cause notice. 2. Whether the refund claim under Notification No. 9/2009-ST in respect of input services wholly consumed within the SEZ is admissible. 3. Whether the refund claim for services not mentioned in the application to SEZ Authority but included in the approved list is admissible. 4. Whether insurance auxiliary services can be treated as included under General Insurance Service for the purpose of refund claim. Summary: 1. Whether the impugned order has traveled beyond the show cause notice: The Tribunal observed that the allegations mentioned in the show cause notice (SCN) were not explicitly detailed. However, it held that the SCN had broadly show caused the appellant for the violation of Notification No. 9/2009-ST. Thus, the impugned order did not travel beyond the SCN as it covered the conditions of the notification. 2. Whether the refund claim under Notification No. 9/2009-ST in respect of input services wholly consumed within the SEZ is admissible: The Tribunal agreed with the adjudicating authority that the refund claim for services wholly consumed within the SEZ should have been claimed under Section 11B of the Central Excise Act, 1944. The notification provided exemption by way of refund, which required first paying service tax and then seeking a refund. The Tribunal held that the insertion of clauses providing relief for wholly consumed services was substantive and mandatory, not merely procedural. 3. Whether the refund claim for services not mentioned in the application to SEZ Authority but included in the approved list is admissible: The Tribunal upheld the adjudicating authority's view that the appellant did not apply for the inclusion of Scientific Technology Consultancy Services and Customs House Agent Services in their initial application. Since these services were included in the approved list only after the relevant period, the appellant was not entitled to claim a refund for the service tax paid on these services for the period prior to their inclusion. 4. Whether insurance auxiliary services can be treated as included under General Insurance Service for the purpose of refund claim: The Tribunal found that the appellant had not provided evidence to substantiate their claim that the invoices pertained to "employee medical insurance" rather than "insurance auxiliary service." Since the insurance auxiliary service was not included in the approved list, the refund claim for this service was rightly rejected by the adjudicating authority. Conclusion: The Tribunal concluded that the denial of the refund claim based on the non-inclusion of services in the approved list by the SEZ authority was not justified. The SEZ Act provides for exemption from all taxes, and any levy and collection of taxes from SEZ units without authority in law contravenes Article 265 of the Constitution. The Tribunal allowed the appeal, setting aside the impugned order. Appeal Outcome: The appeal was allowed, and the impugned order was set aside.
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