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TMI Blog2019 (6) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... iew that the adjudicating authority has not considered such technical and practical aspects, nor is there a finding in this regard. Accordingly, as the refund application has been filed within the end of the quarter from one year, such delay should be condoned and consequential refund allowed. Refund claim - common input services - HELD THAT:- Services which are common in nature not exclusively used for authorized operation have to be dealt in a manner prescribed. Clause (a) of Paragraph III of the said Notification provides that the service tax paid on specified services that are common to the authorized operation in an SEZ and the operation is domestic Tariff Area (DTA units) shall be distributed amongst the SEZ unit and DTA units in the manner as prescribed in Rule 7 of Cenvat Credit Rules. Moreover, it further provides that for the purpose of distribution, the turnover of the SEZ unit shall be taken as the turnover of authorized operation during the relevant period - In the instant case, it is the argument of the Appellant s Counsel that they do not have any DTA units, however, they do have DTA operations wherein they are providing erection and commissioning service. Moreover, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification for grant of refund is receipt of services by the SEZ Unit on payment of service tax. He also submits that as long as this requirement is met, other procedural deviations can be condoned as the procedure has been stated only to facilitate verification of substantive requirement . It is not in dispute that the services, which have been received by SEZ Unit for authorized operations and service tax has been paid thereon. The ld.Counsel further submits that Clause 3 (e) of Notification No.12/2013-ST dated 01.07.2013, provides that the Assistant Commissioner or the Deputy Commissioner of Central Excise, shall permit the appellant to file the application even beyond the period of limitation. Accordingly, the delay in filing of the refund claim, if any, should be considered by the authorities below. The ld.Counsel, however, submits that the Appellant Company has only one work and/or factory at the relevant period, which is located at Special Economic Zone, Sector 2, Falta, 24 Parganas (South), West Bengal-743504 and the Company has its registered office at Tobacco House, 4th Floor, 1 Old Court House Corner, Kolkata-700001. He further submits that the Refund Sanctioning Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistant Commissioner/Deputy Commissioner to permit extended period of time for filling refund application. 6.4 It has been observed that the lower authority has not considered the extended period of time particularly in lieu of overlapping provisions arising out of conjoint reading of Clause (e) & (f) of Paragraph III of the said Notification and disallowed the refund application on the ground of time barred, which is against the principal of natural justice. Moreover, there is no finding in the order of Adjudicating Authority or Appellate Authority that the service tax has not been paid to the service provider. The legislature requires no service tax to be charged to a SEZ unit and hence procedural provisions needs to be interpreted considering spirit and intensions of the legislature. 6.5 In the light of overlapping in the impugned Notification, I am of the view that the adjudicating authority has not considered such technical and practical aspects, nor is there a finding in this regard. Accordingly, as the refund application has been filed within the end of the quarter from one year, such delay should be condoned and consequential refund allowed. 6.6 In respect of methodol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant case, the Appellant had paid service tax of ₹ 8.82.495/- to the service providers raising invoices with the address of SEZ unit. Thus, in terms of explanation to Clause (e) of Paragraph III of the said Notification amended vide Notification Number 7/2014-ST dated 11.07.2014, the refund of service tax to the extent of said amount is exclusively for SEZ unit and used for authorized operation in SEZ. There is no dispute on this count from the end of Respondent. Summary of refund claimed during the second quarter is as follows : TABLE-A Particulars Note Amount (Rs.) Credit exclusively used for Authorized operations in SEZ Unit A 8,82,495/- Common Credit used for Authorized operations proportionate between sales of SEZ Unit and Administration office B 8,44,349/- Total Refund claimed for the Quarter C = A +B 17,26,844/- 6.10 Service Tax on services bearing address of head office to the tune of ₹ 8,44,349/-, being common input service invoiced to Head Office is point of contention of the revenue. These common services are received by the company as a whole and cannot be earmarked to a specific location and/or unit as these are common in nature. In order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorized operation. 6.13 In the light of the said governing principals arising from SEZ Act, 2005 and rules made thereunder, Notification No. 12/2013-ST dated 01.07.2013 has been introduced. The preamble of the said Notification categorically and specifically allows service tax refund used for authorized operation. Further, service tax invoice bearing SEZ unit address has been deemed as used exclusively for SEZ and irrespective of its usage and accordingly, full and complete refund of service tax have been specified. For service tax invoices bearing different address than that of SEZ unit, being non exclusive in nature, refund on proportionate basis calculated in terms of Rule 7 of CCR has been provided. Summary of reversal during the 2nd Quarter is as follows : TABLE - C Particulars Note Amount (Rs.) Turnover of Trading sales in 2nd Quarter G 1,52,62,550/- Total Turnover for 2nd Quarter H 70,95,17,991/- Total Service Tax for 2nd Quarter I 9,41,175/-* Reversal of service tax pertaining to Trading Turnover for Q2 J=I*G/H 96,826/- Proportionate Credit for Authorized Operations claimed as refund K=I-J 8,,44,349/- *Aggregate common credit for the quarter Jul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s kept by it at the recipient end would indicate its "intended use" and "substantial compliance" with procedure set out in Chapter 10 of the Central Excise Rules, 1994, for consideration? The Constitution Bench answering the said question concluded that a manufacturer qualified to seek exemption was required to comply with the preconditions for claiming exemption and therefore is not exempt or absolved from following the statutory requirements as contained in the Rules. The Constitution Bench then considered and reiterated the settled principles qua the test of construction of exemption clause, the mandatory requirements to be complied with and the distinction between the eligibility criteria with reference to the conditions which need to be strictly complied with and the conditions which need to be substantially complied with. The Constitution Bench followed the ratio in Hansraj Gordhandas Case (supra), to reiterate the law on the aspect of interpretation of exemption clause in para 29 as follows- "The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rror image type of strict compliance. Substantial compliance means "actual compliance in respect to the substance essential to every reasonable objective of the statute" and the Court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. 33. A fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance with an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non-compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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