2024 (7) TMI 1358 - AT - Service Tax

Admissibility of refund claims filed by a SEZ unit for the service tax paid on input services in terms of the notifications issued under the Finance Act, 1994 - N/N. 40/2012 ST dated 20.06.2012 and under N/N. 12/2013 ST dated 1.07.2013 - denial on the ground that the conditions specified in the notification, in particular condition number 2 (c), 3 (e) and 3 (f) were not complied with - HELD THAT - The law is well settled that benefit of exemption granted under the notifications issued under the Finance Act are of general nature being available to any one and not necessarily confined to a unit in SEZ, which is peculiar in the case of section 26 of SEZ Act being a special power of exemption under a special enactment for a unit in a special economic zone. Therefore, notification issued under section 93 of the Finance Act 1994 cannot be pressed into service for finding out whether a unit in SEZ qualifies for exemption or not. It is found that it is an admitted position that the respondents are holders of letter of approval issued by the Development Commissioner for the manufacture of pharmaceutical products within the Special Economic Zone, Pithampur, Indore. They have availed various services for setting up their unit in the SEZ, which have been used in relation to the operations of the unit - the services rendered by the appellant are fully exempted from service tax in terms of the provisions of the SEZ Act, the condition of exemption by way of refund imposed by virtue of the notifications issued under the provisions of the Finance Act are inconsistent with the provisions of the SEZ Act and hence the provisions thereof cannot be imposed on the respondent to deny the refund. The view taken in the impugned order is in accordance with the decisions of the High Court as well as by various Benches of the Tribunal and hence no interference is called for. There are no merits in the appeals filed by the revenue - the appeals are dismissed.

Summary

Issues:
Admissibility of refund claims by SEZ unit for service tax paid on input services under exemption notifications.

Analysis:
The appeals were filed by the revenue challenging an order allowing refund claims by a SEZ unit for service tax paid on input services. The respondent, a pharmaceutical manufacturer and exporter, availed various services for its SEZ operations and filed refund claims under specific notifications. The revenue argued non-compliance with notification conditions, citing Supreme Court decisions on strict interpretation of exemptions. The respondent contended that SEZ units are exempt from service tax under the SEZ Act, supported by various decisions. The Tribunal found the issue to be settled in favor of SEZ units, citing SEZ Act provisions overriding other laws, including the Finance Act. The Tribunal emphasized that SEZ units are exempt from central excise, customs, and service tax, rendering exemption notifications redundant. The Tribunal upheld the Commissioner's decision, noting the respondent's compliance with SEZ requirements and the irrelevance of Finance Act notifications to SEZ exemptions. The appeals were dismissed based on settled law and previous decisions, without merit for interference.

Conclusion:
The Tribunal ruled in favor of the respondent, dismissing the revenue's appeals challenging the refund claims by the SEZ unit for service tax paid on input services. The decision was based on the overriding effect of the SEZ Act provisions, exempting SEZ units from various taxes, making Finance Act notifications irrelevant. The Tribunal upheld the settled law and previous decisions supporting SEZ units' exemption from service tax, concluding no grounds for interference with the Commissioner's decision.