Custom, Excise & Service Tax Tribunal
Steria India Limited vs Ce & Cgst Noida on 21 December, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70377 of 2020
(Arising out of Order-in-Appeal No.NOI-CUSTM-000-APP-1395-19-20 dated
11/02/2020 passed by Commissioner (Appeals) Central Goods & Services
Tax, Noida)
M/s Steria India Ltd., .....Appellant
(B. No.4, Plot No.20 & 21, Sector-135, Noida-201301)
VERSUS
Commissioner of Customs &
Central Excise, Noida ....Respondent
(C-56/42, Renu Tower, Sector-62, Noida-201301)
WITH
I. Service Tax Appeal No.70378 of 2020 (M/s Steria India
Ltd.);
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1482-19-20
dated 26/02/2020 passed by Commissioner (Appeals) Central Goods &
Services Tax, Noida)
II. Service Tax Appeal No.70379 of 2020 (M/s Steria India
Ltd.);
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1481-19-20
dated 26/02/2020 passed by Commissioner (Appeals) Central Goods &
Services Tax, Noida)
III. Service Tax Appeal No.70381 of 2020 (M/s Steria India
Ltd.);
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1483-19-20
dated 26/02/2020 passed by Commissioner (Appeals) Central Goods &
Services Tax, Noida)
APPEARANCE:
Shri Vishal Kumar, Advocate for the Appellant
Shri Manish Raj, Authorised Representative for the Respondent
CORAM: HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NOs70277-70280/2023
DATE OF HEARING : 21 December, 2023
DATE OF DECISION : 21 December, 2023
2 Service Tax Appeal No.70377-70379 &
70381 of 2020
SANJIV SRIVASTAVA:
Appellant is an STPI as well as SEZ unit registered with
STPI & SEZ Noida. They are having centralized service tax
registration No AAACX0385LST001 for providing the service
classifiable under the category of Information Technology
Software Services, Business Auxiliary Service and Management
Consultancy Services.
1.2 Appellant had filed four refund claims as detailed below
claiming refund of service tax paid on input services in terms of
Notification No 40/2012-ST dated 20.06.2012 . These refund
claims have been disposed of by the original authority
disallowing certain amounts which were not admissible to the
appellant as CENVAT Credits, hence could not have been
considered for computation of the refunds due, as per the order
in original detailed in table below:-
Refund Claim Order in Original
Date Period Amount No Date
30.09.2013 Oct 12 to 11208523 65/R/AC/CGST/D- 13.08.2018
Dec 12 I/2018-19
29.09.2015 Jul 14 to 2866101 117/R/AC/CGST/D- 17.10.2018
Sept 14 I/2018-19
29.09.2015 Oct 14 to 3836800 119/R/AC/CGST/D- 17.10.2018
Dec 14 I/2018-19
30.12.2015 Jan 15 to 4064450 120/R/AC/CGST/D- 17.10.2018
Mar 15 I/2018-19
1.3 These orders were challenged by the appellant before the
Commissioner (Appeal), who has vide his orders as detailed in
table below disposed of the appeals. Aggrieved by the impugned
orders appellants have filed these four appeals as detailed in
table below:
Appeal No Order in appeal Order in Original
No Date No Date
ST/70377/2020 NOI- 11.02.2020 65/R/AC/CGST/D- 13.08.2018
CUSTM- I/2018-19
000-APP-
1395-19-
20
ST/70379/2020 NOI- 28.02.2020 117/R/AC/CGST/D- 17.10.2018
CUSTM- I/2018-19
000-APP-
1481-19-
20
ST/70381/2020 NOI- 28.02.2020 119/R/AC/CGST/D- 17.10.2018
CUSTM- I/2018-19
000-APP-
1483-19-
3 Service Tax Appeal No.70377-70379 &
70381 of 2020
20
ST/70378/2020 NOI- 28.02.2020 120/R/AC/CGST/D- 17.10.2018
CUSTM- I/2018-19
000-APP-
1482-19-
20
1.4 The impugned orders read as follows:
OIA No NOI-CUSTM-000-APP-1395-19-20 dated
11.02.2020
5. I have carefully gone through the above mentioned
order and contents of appeal, oral as well as written
submissions by the party. I find that Input Service tax
Credit ahs been denied by the department on the following
Input services alleging that the party took CENVAT Credit
on the various input services which did not appear to be
eligible in terms of said Notification as these services have
not been approved by the Development Commissioner.
1) Advertising Agency;
2) Courier Services;
3) Room Rental;
4) Land Scapping;
5) Sponsorship Services;
6) AMC-Gym;
7) Misc. Services;
5.1 The appellant vide their grounds of appeal, have
contested, service wise, as below;
1) SPONSORSHIP SERVICE:- An amount of Rs.
24,720/- was paid by the Appellant on the 'sponsorship
service' under RCM and the same has been availed by
them in relation to the authorized operations. Since the
liability of payment of service tax on 'sponsorship service'
is under reverse charge, the refund would be allowable
irrespective of whether the same is an approved service or
otherwise. The Sec. 26 of the SEZ Act, 2005 (SEZ Act'),
provides for special fiscal provisions with respect to units
in special economic zones. In terms of the said Section
26(e) of the SEZ Act read with Rule 31 of the SEZ Rules,
4 Service Tax Appeal No.70377-70379 &
70381 of 2020
2006, every Developer and the entrepreneur shall be
entitled to exemption from payment of service tax under
Chapter V of the Finance Act, 1994 on taxable services
provided to a Developer or unit to carry on the authorized
operations in a Special Economic Zone. Section 51 of the
SEZ Act further provides that the provisions of SEZ Act
shall have effect notwithstanding anything inconsistent
therewith contained in any other law for the time being in
force or in any instrument having effect by virtue of 22 any
law other than this Act. Service tax under 'sponsorship
service' is payable under reverse charge by the service
receiver in terms of Rule 2(1)(d)(Q) of the Service Tax
Rules, 1994 ('Service Tax Rules'). In terms of Serial No. 2
(f) of Notification No. 40/2012-ST dated 20.06.2012, the
exemption contained in the notification shall be allowed to
the unit of a SEZ claiming the exemption by way of refund,
on the condition that the said unit of a SEZ should have
paid the amount indicated in the invoice, bill or as the case
may be, challan, including the service tax payable, to the
person liable to pay the said tax or the amount of service
tax payable under reverse charge, as the case may be,
under the provisions of the said Act. Thus, in terms of the
provisions contained under Rule 2(1)(d)(C) of the Service
Tax Rules read with Section 26 read and Section 51 of the
SEZ Act, and further read with Rule 31 of the SEZ Rules,
the refund is allowable to the Appellant irrespective of
whether the said service is specifically approved or
otherwise. In view of the aforesaid legal provision, it was
the submission of the Appellant that since the Appellant
was the person liable to deposit service tax in relation to
`sponsorship service' received by it, there was no
requirement to get the said services approved as the said
services have been used in relation to authorized
operations of the Appellant, The object behind getting the
services approved by the Approval Committee of the SEZ
is to secure the fact that the said services should be
5 Service Tax Appeal No.70377-70379 &
70381 of 2020
availed in relation to authorized operations by the SEZ
unit. If the said services are not in relation to the
authorized operations, the said approval would not be
granted. However, it is submitted by the Appellant that
where the service tax was payable by the SEZ unit under
reverse charge, the same will operate as an exception to
the requirement of getting the services approved by the
approval committee. In such scenario, the Appellant is
entitled to the refund of Rs. 24,720/- representing service
tax paid by it in relation to 'sponsorship service' under
reverse charge. I find the full force in the contention of the
party and allow the Input service credit of Rs. 24720/-.
5.2 COURIER SERVICE:- The impugned order has denied
the refund claim of service tax amounting to Rs. 29,726/-
paid by the Appellant on the 'courier services' availed by
them which was an approved service as per the default list
of approved services dated 29.08.20 12 and the same
appears under serial no. 1 of the approved list of services.
I have gone through the default list of Service in terms of
Notification No. 40/2012 dated 20.06.2012 effective from
01.07.2012 for use by the units in SEZs located at Noida,
Greater Noida and Khurja (Annexure-I) circulated/issued
vide letter 10/20/2011-SEZ/6572 dated 29.08.2012 and
find that Courier service finds mention at Sl. No. 1 of
approved list of services. Hence, credit of Rs. 29726/-
taken on Courier Service is allowable to the appellant
5.3 As regards advertising services, landscaping services
and gym services amounting to Rs. 8990/- it was
submitted that they had availed these services in relation
to authorized operations. Regarding the 'landscaping
services' they took plea that the Appellant had submitted
proposal for approved list of services (after from the
default list) and the same was accepted vide Minutes of
Meeting of the Development Commissioner dated
11.01.2012. In such scenario, the 'landscaping services'
had been availed in relation to the authorized operations of
6 Service Tax Appeal No.70377-70379 &
70381 of 2020
the Appellant But nothing was produced in support of their
plea and no legal stand was taken in respect of Advertising
Services, AMC-GYM Services and Misc. Services. Hence, I
do not find the required weightage in the contention of the
party and disallow the credit on this count
5.4 As regards 'Room Rental Service' involving an amount
of Rs. 16265/-,I find that the same has been withdrawn by
the party vide their reply letter dated 11.06.2014 to Show
Cause Notice wherein they mentioned that this amount
was claimed in excess due to incorrect computation and is
a bonafide error on their part.
5.5 I find that the appellant contested forcefully that there
was violation of natural justice but nothing was found on
record in this regard as the appellant had himself admitted
that they were afforded the opportunity of personal
hearing by the adjudicating authority on 27.02.2018 which
was attended by Sh. Tarique Rehman, Manager(Finance)
of the party and Sh. Vishal Kumar, Advocate, on the behalf
of the appellant. When they attended PH, they could have
submitted their written explanation to the adjudicating
authority. In view of the above, the allegation of the
appellant does not stand.
OIA No NOI-CUSTM-000-APP-1481-19-20 dated
28.02.2020
5.1 I. find that the adjudicating authority denied the
refund mainly on the grounds i.e various input services were
not approved by the Development Commissioner, SEZ, as
per requirement of the Notification and some of the invoices
on which credit was taken were addressed to the outside of
SEZ premises; even some invoices were missing .On going
through the Annexure-I enclosed with the SCN, I find that
credit as well as refund has been denied mainly on the
following reasons for inadmisibility;
1 Some services were not approved in the default list.
2 Some services were used at unregistered premises.
7 Service Tax Appeal No.70377-70379 &
70381 of 2020
3 Invoice not produced
5.2 Taking up the first issue, I observe that the requisite
approval for the specified services was to be accorded by
the approval Committee, which was one of the essential
condition of Notification No 12/2013. If any service was not
approved as specific service that same could not be taken
for the refund as per said Notification. The conditions
provided under the said notification says that:
"for the purpose of claiming exemption, the Unit of a SEZ or
developer shall obtain a list of services that are liable to
service tax as are required for the authorised operations
approved by the Approval Committee (hereinafter referred
to as the specified services) of the concerned SEZ;"
hence credit taken on Services which are not approved by
the approval committee is not admissible to the appellant
and the refund attributed to the extent of those services is
not admissible to the party
5.3 As regards Services used at the unregistered unit
outside SEZ,I find that the exemption benefit by way of
refund under Notification No.12/2013-ST dated 01.07.2013
is available only to the services received by the units
located in SEZ. Hence benefit of the Notification
No.12/2013-ST dated 01.07.2013 may not be granted to
the party. In case of Invoice not produced before the
adjudicating authority is not admissible to the appellant in
the absence of the Original Invoice, hence credit on the
same is not admissible to them.
OIA No NOI-CUSTM-000-APP-1483-19-20 dated
28.02.2020
5. I have carefully gone through the above mentioned
impugned order and contents of appeal, oral as well
written submission of the party along with relevant
Act/Rule. In this case, it isobserved that Input Service Tax
Credit has been denied by the Adjudicating authority on
the following Input services, alleging that the party took
CENVAT Credit on the various input services which did not
8 Service Tax Appeal No.70377-70379 &
70381 of 2020
appear to be eligible in terms of said Notification as these
services were not approved by the Development
Commissioner, and some of invoices were addressed to the
outside of SEZ premises.
Sl. No Description of Service
2. Repair and Maintenance Service
3. Sponsorship Service
4. Membership Fee
5. Manpower Recruitment & Supply Agency Services
6. Telecommunication Service
7. Insurance Auxiliary Service
8. Security Agencies
9. Charted Accountant Service
10. Non-Executive Director Fee
11. Photography Service
12. Works Contract Service
5.1 I. find that the adjudicating authority denied the
refund mainly on the grounds i.e various input services
were not approved by the Development Commissioner,
SEZ, as per requirement of the Notification and some of
the invoices on which credit was taken were addressed to
the outside of SEZ premises; even some invoices were
missing .On going through the Annexure-I enclosed with
the SCN, I find that credit as well as refund has been
denied mainly on the following reasons for inadmisibility;
1. Some services were not approved in the default list.
2. Some services were used at unregistered premises.
3. Invoice not produced
4. Car maintenance/ Not related to Export Service-
Authorised operation.
5.2 Taking up the first issue, I observe that the requisite
approval for the specified services was to be accorded by
the approval Committee, which was one of the essential
condition of Notification No 12/2013. If any service was
not approved as specific service that same could not be
9 Service Tax Appeal No.70377-70379 &
70381 of 2020
taken for the refund as per said Notification. The
conditions provided under the said notification says that:
"for the purpose of claiming exemption, the Unit of a SEZ
or developer shall obtain a list of services that are liable to
service tax as are required for the authorized operations
approved by the Approval Committee (hereinafter referred
to as the specified services) of the concerned SEZ;"
hence credit taken on Services which are not approved by
the approval committee is not admissible to the appellant
and the refund attributed to the extent of those services is
not admissible to the party
5.3 As regards Services used at the unregistered unit
outside SEZ,I find that the exemption benefit by way of
refund under Notification No.12/2013-ST dated
01.07.2013 is available only to the services received by
the units located in SEZ. Hence benefit of the Notification
No.12/2013-ST dated 01.07.2013 may not be granted to
the party.
5.4 In case of Invoice not produced before the
adjudicating authority pertaining to the Works Contract
Service involving an amount of Service Tax Rs. 486/-is not
admissible to the appellant in the absence of the Invoice.
Further, maintenance and repair service does not find
place in the Default List of Services approved by approval
committee held on 26.09.2013 in terms of Notification No.
12/2013-ST dated 01.07.2013, hence credit on the same
is also not admissible to them 6. I n the light of above
findings and discussions the impugned order is upheld and
the appeal is rejected.
OIA No NOI-CUSTM-000-APP-1482-19-20 dated
28.02.2020
5.1 I. find that the adjudicating authority denied the
refund mainly on the grounds i.e various input services were
not approved by the Development Commissioner, SEZ, as per
requirement of the Notification and some of the invoices on
which credit was taken were addressed to the outside of SEZ
10 Service Tax Appeal No.70377-70379 &
70381 of 2020
premises; even some invoices were missing .On going
through the Annexure-I enclosed with the SCN, I find that
credit as well as refund has been denied mainly on the
following reasons for inadmisibility;
1 Some services were not approved in the default list.
2 Some services were used at unregistered premises.
3 Invoice not produced
5.2 Taking up the first issue, I observe that the requisite
approval for the specified services was to be accorded by the
approval Committee, which was one of the essential
condition of Notification No 12/2013. If any service was not
approved as specific service that same could not be taken for
the refund as per said Notification. The conditions provided
under the said notification says that:
"for the purpose of claiming exemption, the Unit of a SEZ or
developer shall obtain a list of services that are liable to
service tax as are required for the authorized operations
approved by the Approval Committee (hereinafter referred to
as the specified services) of the concerned SEZ;"
hence credit taken on Services which are not approved by
the approval committee is not admissible to the appellant
and the refund attributed to the extent of those services is
not admissible to the party
5.3 As regards Services used at the unregistered unit
outside SEZ,I find that the exemption benefit by way of
refund under Notification No.12/2013-ST dated 01.07.2013 is
available only to the services received by the units located in
SEZ. Hence benefit of the Notification No.12/2013-ST dated
01.07.2013 may not be granted to the party.
5.4 In case of computation of refund claim pertaining to
Manpower Recruitment Services, the appellant has contended
that Adjudicating Authority has erred in re-computing the
refund amount by applying the formula twice as the service
tax paid is admissible in totality. Hence, the refund amount
has been further reduced by Rs. 7474/- from Rs. 14392/-. I
find that adjudicating authority has rightly applied the
11 Service Tax Appeal No.70377-70379 &
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formula for computation of refund claim involved on these
services in the manner prescribed under para iii (a) of
Notification No. 12/2013-ST dated 01.07.2013 read with rule
7 of the Cenvat Credit Rules,2004.
1.5 From the perusal of the above impugned orders it is
evident that the main reason for denial of Cenvat Credit/ Refund
to the appellants in all the four orders is that these services are
not found in the approved list of services for the authorized
operations of the unit located in SEZ. Since the common issue is
involved in all the four appeals they have been taken up for
consideration together.
2.1 I have heard Shri Vishal Kumar, Advocate for the Appellant
and Shri Manish Raj Authorized Representative for the revenue,
2.2 Arguing for the appellant learned advocate submits:
Refund of service tax paid is legally admissible to the
appellant since majority of services are approved by the
Development Commissioner.
The requirement of getting the services approved from
Development Commissioner/ Unit Approval Committee is
merely procedural in nature in light of the overriding effect
of Section 51 of the SEZ Act, 2005, hence refund cannot
be denied for procedural infractions, if any.
Service tax on Sponsorship Service and Management or
Business consultant service (director's remuneration) has
been availed in relation to authorized operations and
service tax has been paid under reverse charge, hence,
refund on same be allowed.
Refund in respect of service tax paid in relation to invoices
inadvertently raised to unit of appellant outside SEZ
cannot be denied, more so, when the services have been
availed by the appellant in relation to authorized
operations.
2.3 Learned authorized representative reiterates the findings
recorded in the impugned order.
12 Service Tax Appeal No.70377-70379 &
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3.1 I have considered the impugned orders along with the
submissions made in the appeal and during the course of
arguments.
3.2 The issue involved in the present case is vis a vis the
condition provided in the Notification No 40/2012-ST & 12/2013-
ST in terms of which these fund applications have been made.
The said condition reads as follows:
"(c) for the purpose of claiming exemption, the Unit of a
SEZ or developer shall obtain a list of services that are
liable to service tax asare required for the authorised
operations approved by the Approval Committee
(hereinafter referred to as the specified services) of
the concerned SEZ;"
3.3 The issue in respect of applicability of the said condition for
considering the application of refund made under the said
notification is no longer res-integra and has been adjudged in a
series of decisions of CESTAT. I reproduce the relevant
paragraphs from the recent decision of the Allahabad Bench in
the case of EXL Services SEZ BPO Solutions Pvt. Ltd. [2023-
TIOL-852-CESTAT-ALL] on the issue:
4.4 Further, we find that the only issue for consideration in
the present case is 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. 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
13 Service Tax Appeal No.70377-70379 &
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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. The condition
specified in proviso (a) to the notification only provides a
manner for verification that the services in respect of
which the refund claim has been made were received by
the SEZ developer or the SEZ Unit. There can be many
other ways by which the said claim with regards to the
receipt of these services by the SEZ unit can be verified.
Till the time the factum of receipt of these services by the
SEZ unit is not disputed the denial of refund of service tax
paid on any service received by such unit would be
contrary to the provisions of Article 265 of the
Constitution. 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.
4.5 We also find that the issue involved in the present
appeal is no longer res-integra. Similar view has been
expressed by the tribunal in following cases
A. In case of Metlife Global Operations Support Center (P)
Ltd. [2021 (46) GSTL 418 (T-Del)] = 2021-TIOL-10-
CESTAT-DEL following has been held:
"40. This issue relates to proviso (a) of the notification
dated March 3, 2009. It provides that the Developer or
Units of SEZ shall get the list of services specified in
Section 65(105) of the Finance Act as are required in
relation to the authorized operations in the SEZ, approved
from the UAC.
14 Service Tax Appeal No.70377-70379 &
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41. It has been pointed out by Learned Counsel for the
appellant that the output services rendered by the SEZ
unit of the appellant were only for authorized operations.
The contention of the Learned Counsel for the appellant,
therefore, is that not only does the impugned order not
contain any specific finding or quantification, but even
otherwise the requirement of grant of approval by the UAC
cannot be considered as a mandatory condition to override
the exemption that has been granted under Section 26 of
the SEZ Act and the SEZ Rules framed thereunder. It is,
therefore, the contention that the Commissioner (Appeals)
committed an illegality in rejecting the refund applications
filed by the appellant.
42. Learned authorised representative has, however,
submitted that the appellant is not entitled to the refund.
43. The records indicate that the appellant had during the
relevant period only one operating unit in the SEZ. All the
input services were, therefore, used by the appellant for
the authorized operations, namely, BPO (ITES) as per the
specific condition prescribed under the SEZ Act for seeking
exemption from service tax and the letter dated June 19,
2008. The output services rendered by the SEZ unit of the
appellant is for authorized operations. It is not the case of
the Department that the output services have been used
for services other than authorized operations nor any
finding to this effect has been recorded. Thus, the service
tax paid on all input services used for rendition of such
output services are available for claim of refund in terms of
the substantive provisions of the SEZ Act.
44. In any case, the conditions imposed by the
notifications issued under the provisions of the Finance Act
are merely directory in nature.
45. This issue has been considered time and again. In Mast
Global Business Services India Pvt. Ltd. v. Commissioner of
Central Tax - 2018-TIOL-3115-CESTAT-BANG the Tribunal
15 Service Tax Appeal No.70377-70379 &
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held that the SEZ Act had an overriding effect, in view of
the provisions of Section 51 of the SEZ Act, over all other
laws and, therefore, the ground for rejecting the refund
claims was not tenable in law and even otherwise,
approval from UAC was only procedural in nature and not a
mandatory condition. The relevant portion of the decision
of the Tribunal is reproduced below :
"The other grounds on which the refund claims have been
rejected by the impugned order is that the appellant has
not produced the approved list of specified input services
from the UAC to SEZ which is a mandatory condition as per
the Commissioner (Appeals). In reply to this argument, the
Learned Counsel submitted that in view of the settled legal
position by various decisions relied upon by him, condition
in respect of approval from UAC of SEZ is not a mandatory
requirement as the SEZ Act vide Section 51 of SEZ Act will
have overriding effect over the provisions of any other law.
Therefore, keeping in view, the intention of the
Government in enacting the SEZ Act and giving special
fiscal concessions to SEZs, I am of the considered opinion
that this is only a procedural and is not a mandatory
condition as held by the Commissioner (Appeals). Further
the decisions relied upon by the appellant clearly hold that
the SEZ Act has a overriding effect over other laws.
Therefore, this ground on the basis of which refund claims
have been rejected is not tenable in law."
(emphasis supplied)
46. In M/s. ONGC Mangalore Petrochemicals Limited v.
Commissioner of Central Excise & Central Tax, Mangalore
Commissionerate [2019-VIL-140-CESTAT-BLR-ST] = 2018-
TIOL-1435-CESTAT-BANG, the Tribunal again held :
"6. After considering the submissions of both the parties
and perusal of the material on record, I find that the
appellant being SEZ is entitled to refund of Service Tax
paid on input service used for authorized operations.
Further, I find that as per Notification No. 12/2013-S.T.,
16 Service Tax Appeal No.70377-70379 &
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dated 1-7-2013, the only requirement is that the appellant
is required to file the list of approved services which have
been used by them for authorized operations. Further, in
this case, I find that the appellant has subsequently
obtained the approval from the Unit Approval Committee of
the SEZ and the said certificate is placed on record but the
Commissioner (A) has held that the said approval was
obtained from the competent authority on 25-10-2011 and
therefore, after the approval, he has allowed the refund
and prior to that he has rejected the same. Further, I find
that in view of the settled legal position by various
decisions relied upon by the appellant, conditions of
approval from UAC is not a mandatory requirement as per
SEZ Act vide section 51 of the SEZ Act which has an
overriding effect over the provisions of any other law.
Further, I find that it is only a procedural requirement to
get the approval from the Unit Approval Committee and is
not a mandatory condition as per the SEZ Act which has an
overriding effect over other laws."
(emphasis supplied)
47. In SE Forge Ltd. v. Commissioner of Central Excise,
Coimbatore [2019 (365) E.L.T. 560 (Tri. - Chennai)] =
2018-TIOL-2303-CESTAT-MAD, a Division Bench of the
Tribunal observed that in view of the provisions of Section
26 of the SEZ Act, the notifications issued under the
Finance Act cannot deprive a person from exemption of
service tax. The Tribunal further held that the requirement
for obtaining approval of UAC is only a procedural
requirement for claiming the substantive benefit of
exemption from service tax. The Department was,
therefore, not justified in rejecting the claim. The relevant
portion of the decision is reproduced below :
"5. The issue that arises for consideration is whether the
appellant is eligible for refund of service tax paid on
Renting of Immovable Property Service. The original
authority has rejected the refund on the ground that on
17 Service Tax Appeal No.70377-70379 &
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the date of filing of the refund claim, the said services, viz;
Renting of Immovable Property Services were not
approved by the Development Commissioner, as required
under Notification No. 9/2009 as amended. As per the
notification, exemption is allowed in relation to authorised
operations in SEZ, provided the developer or units of SEZ
shall get the list of services which are required in relation
to the authorised operations approved from the Approval
Committee. The appellant although requested for approval
of 106 services initially, the Assistant Commissioner had
approved only 37 services which was only default list or
rather a general list applicable to all SEZ. It is seen that
Development Commissioner has approved the list including
Renting of Immovable Property Services vide letter dated
15-9-2009. It is not disputed that Renting of Immovable
Property Service was availed by the appellant for the
disputed period. The invoices shows the payment of
service tax on such services. The Approval Committee has
approved such services vide their letter dated 15-9-2009.
The requisite for obtaining approval is only a procedure to
be complied with, for the substantive benefit of exemption
from payment of service tax. When the services have been
approved, the benefit of exemption cannot be denied.
Section 26 of the SEZ Act, lays down provisions for
exemption from duties and taxes. Section 51 of the said
Act provides for overriding effect. Therefore the immunity
provided from paid service tax cannot be taken away by
the procedural prescriptions of Notification No. 9/2009 or
15/2009. These notifications are calibrated to enable
recipients of taxable services of SEZ, etc., to get benefit of
exemption of the service tax. In any case, since the
appellants have obtained approval for the said services, we
find that the error would only be a procedural infraction
which can be condoned. The substantive benefit cannot be
denied for a procedural lapse. The claim of Rs. 967/- being
18 Service Tax Appeal No.70377-70379 &
70381 of 2020
given up by appellant is not considered in this appeal."
(Emphasis supplied)
48. Thus, the Commissioner (Appeals) was not justified in
rejecting the refund claims on this ground."
B. In case of SRF Ltd [2022 (64) GSTL 489 (T-Del)]
tribunal held as follows:
"36. Special Economic Zones created under the SEZ Act
are on a different footing because the SEZ Act itself
exempts goods and services supplied for authorised
operations to developers and units in the SEZs from the
Customs Duty, Central Excise Duty and Service Tax. The
provisions of SEZ Act prevail over any other law. Section
26(1) of the SEZ Act, 2005 reads as follows :
26. (1) Subject to the provisions of sub-section (2), every
Developer and the entrepreneur shall be entitled to the
following exemptions, drawbacks and concessions, namely
:-
(a) exemption from any duty of customs, under the
Customs Act, 1962 or the Custom Tariff Act, 1975 or any
other law for the time being in force, on goods imported
into, or service provided in, a Special Economic Zone or a
Unit, to carry on the authorised operations by the
Developer or entrepreneur;
(b) exemption from any duty of customs, under the
Customs Act, 1962 or the Customs Tariff Act, 1975 or any
other law for the time being in force, on goods exported
from, or services provided, from a Special Economic Zone
or from a Unit, to any place outside India :
(c) exemption from any duty of excise, under the Central
Excise Act, 1944 or the Central Excise Tariff Act, 1985 or
any other law for the time being in force, on goods brought
from Domestic Tariff Area to a Special Economic Zone or
Unit, to carry on the authorised operations by the
Developer or entrepreneur;
19 Service Tax Appeal No.70377-70379 &
70381 of 2020
xx xx xx
(e) exemption from service tax under Chapter-V of the
Finance Act, 1994 on taxable services provided to a
Developer or Unit to carry on the authorised operations in
a Special Economic Zone;
37. Thus, Section 26(1) of the SEZ Act is inconsistent with
the three charging sections viz., Section 3 of the Central
Excise Act, 1944, Section 12 of the Customs Act, 1962 and
Sections 66, 66A and 66B of Chapter V of the Finance Act,
1994. In addition to the general principle of a specific law
(pertaining to SEZ) prevailing over the general law (levying
customs, central excise or service tax) and the later
enactment (such SEZ Act, 2005) prevailing over the earlier
enactments (Central Excise Act, 1944, Customs Act, 1962
and Finance Act, 1994), in the SEZ Act, the Parliament has
explicitly resolved this inconsistency between the laws.
Section 51 of the SEZ Act states that the provisions of SEZ
Act override any other provisions of other laws. It reads as
follows :
51.(1) The provisions of this Act shall have effect
notwithstanding anything inconsistent therewith contained
in any other law for the time being in force or in any
instrument having effect by virtue of any law other than
this Act.
38. Thus, insofar as supplies for authorised operations of
SEZ developers and units are concerned, Section 26 of the
SEZ Act overrides the charging sections in all the three
Acts.
39. The charging sections, having been overridden by the
SEZ Act passed by the Parliament, no legal authority to
levy and collect central excise duty, customs duty or
service tax for goods or services supplied for authorised
operations of SEZ developers and units covered by Section
26 remains. Without such a legal authority, no tax or duty
20 Service Tax Appeal No.70377-70379 &
70381 of 2020
can be either levied or collected in view of Article 265 of
the Constitution of India.
40. Therefore, there is no need for any exemption
notifications under any of these three Acts nor is it
necessary to fulfil any conditions of any of the conditions
laid down in exemption notifications, if any, issued for the
purpose. Thus, the charge of excise duty under Section 3
of the Central Excise Act, the charge of Customs Duty
under Section 12 of the Customs Act and the charge of
service tax under Sections 66, 66A and 66B of the Finance
Act, 1994 will not apply to goods and services supplied to
developers and units for authorized operations in the SEZ
areas by virtue of the overriding provisions of the SEZ Act.
Any exemption notifications and conditions therein are
therefore, redundant because, the Parliament itself has,
through Section 51 of the SEZ Act, overridden the charge
in the other laws."
C. Mumbai Bench in case of ECLERX Service Ltd [2023 (72)
GSTL 99 (T-Mum) = 2022-TIOL-811-CESTAT-MUM
Affirmed in 2023 (72) GSTL 4 (Supreme Court)] held as
follows:
2. It was alleged that between June 2009 and February
2011, the appellant herein had rendered 'taxable service'
valued at Rs. 80,16,46,587 on which the liability of Rs.
8,25,69,598 should have been discharged and, in
accordance with Notification No. 9/2009-S.T., dated 3rd
March 2009 and as amended by Notification No. 15/2009-
S.T., dated 20th May 2009, claimed as a refund thereafter
upon compliance with the conditions specified therein.
Likewise, it was alleged that for the period from 1st March
2011 to 14th June 2011, the appellant herein had rendered
taxable service valued at Rs. 16,86,45,901 on which tax
liability of Rs. 1,73,70,528 should have been discharged
and, in accordance with Notification No. 17/2011-S.T.,
dated 1st March 2011, should have been backed by Form
A-1 which, upon scrutiny, was found to have been verified
21 Service Tax Appeal No.70377-70379 &
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only on 14th June 2011. It is further alleged that the
appellant herein, for the period from 1st July 2012 to 31st
March 2013 had availed of exemption against form A-I
which, having been dated only on 29th August 2012,
precluded the privilege between 1st July 2012 and 28th
August 2012 during which taxable service valued at Rs.
12,92,07,189 was rendered without discharging liability of
Rs. 1,59,70,009. In sum, the recovery of Rs. 11,59,10,135
was ordered on account of breach of condition in the
respective notifications embodying the procedure by which
the appellant could have availed exemption from service
tax on supply of services to units in Special Economic
Zones (SEZ).
....
6. The issue to be decided on this appeal is plain and simple enough: whether the notifications relied upon by the adjudicating authority can invalidate exemption accorded under : '
26. (1) Subject to the provisions of sub-section (2), every Developer and the entrepreneur shall be entitled to the following exemptions, drawbacks and concessions, namely :-
(a) exemption from any duty of customs, under the Customs Act, 1962 or the Custom Tariff Act, 1975 or any other law for the time being in force, on goods imported into, or service provided in, a Special Economic Zone or a Unit, to carry on the authorised operations by the Developer or entrepreneur;
(b) exemption from any duty of customs, under the Customs Act, 1962 or the Customs Tariff Act, 1975 or any other law for the time being in force, on goods exported from, or services provided, from a Special Economic Zone or from a Unit, to any place outside India;
(c) exemption from any duty of excise, under the Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or 22 Service Tax Appeal No.70377-70379 & 70381 of 2020 any other law for the time being in force, on goods brought from Domestic Tariff Area to a Special Economic Zone or Unit, to carry on the authorised operations by the Developer or entrepreneur;
(d) drawback or such other benefits as may be admissible from time to time on goods brought or services provided from the Domestic Tariff Area into a Special Economic Zone or Unit or services provided in a Special Economic Zone or Unit by the service providers located outside India to carry on the authorised operations by the Developer or entrepreneur;
(e) exemption from service tax under Chapter-V of the Finance Act, 1994 on taxable services provided to a Developer or Unit to carry on the authorised operations in a Special Economic Zone;
(f) exemption from the securities transaction tax leviable under section 98 of the Finance (No. 2) Act, 2004 in case the taxable securities transactions are entered into by a non-resident through the International Financial Services Centre;
(g) exemption from the levy of taxes on the sale or purchase of goods other than newspapers under the Central Sales Tax Act, 1956 if such goods are meant to carry on the authorised operations by the Developer or entrepreneur.
(2) The Central Government may prescribe the manner in which, and the terms and conditions subject to which, the exemptions, concessions, drawback or other benefits shall be granted to the Developer or entrepreneur under sub- section (1).
of Special Economic Zones Act, 2005. It is unquestionably clear from the '51. (1) The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any 23 Service Tax Appeal No.70377-70379 & 70381 of 2020 instrument having effect by virtue of any law other than this Act.' of Special Economic Zones Act, 2005 that no other law can prevail over it.
7. It is on record that the required documentation was not available for the entire period of the dispute but, at the same time, it cannot be denied that at some point, the eligibility did exist. The procedural infirmities, for a shorter or longer time, does not in any way supplant the exemption accorded to the impugned supply of services. Furthermore, the findings of the adjudicating authority do not arrive at a conclusion that, but for the said procedural infirmities, the eligibility of the appellant to render such services without payment of tax was in question. In the light of decision cited supra, the overriding nature of the exemption afforded by Section 26 of Special Economic Zones Act, 2005 and the breach of conditions being procedural, we have no hesitation in setting aside the demand pertaining to the rendering of services to M/s. Credit Suisse Service (India) Pvt. Ltd."
3.4 I view of the above I do not find any merits in the impugned orders to the extent it seeks to deny CENVAT Credit/ Refund relying on this ground. Similar view has been expressed in the following decisions:
Tega Industries Ltd. {2022 (67) GSTL 81 (T-Ahmd)] Intas Pharmaceuticals Ltd. [2022 (64) GSTL 216 (T- Ahmd)] Divi's Laboratories Ltd. [2021 (54) GSTL 400 (T-Hyd)] Herman Connected Services Corporation India Pvt Ltd.
[2021 (49) GSTL 11 (T-Bang)] SE Forge Ltd. [2019 (365) ELT 560 (T-Chennai)] Reliance Ports and Terminals Ltd. [2015 (40) STR 200 (T- Ahmd)] 3.5 On the ground for rejection that certain invoices were addressed to some other premises of the Appellant which are 24 Service Tax Appeal No.70377-70379 & 70381 of 2020 outside the SEZ. I do not find any merits in the said ground. If it can be shown that the services covered by the said invoices were received and consumed by the appellant unit located in SEZ, then the CENVAT Credit/ Refund could not have been denied. In my view it is the place of receipt and consumption of service which shall determine the admissibility of CENVAT Credit/ Refund. If the appellant is able to establish that the services were received by them in their unit located in SEZ, CENVAT Credit/ Refund as per these notifications shall be admissible to him. In case of SRF Ltd. [2022 (64) GSTL 489 (T-Del)] Delhi Bench has observed as follows:
"46. Refund has been denied in one case on the ground that the address of the SEZ unit was not on the invoice. However, Learned Counsel for the appellant has demonstrated to us with the corresponding Bill of Lading and other documents that the service was, indeed rendered for the SEZ unit only. Therefore, refund cannot be denied on this count."
3.6 On the ground that original invoices against which the CENVAT Credit/ Refund has been claimed have not be produced. I find that Kolkata bench has in the case Vedanta Ltd. [2021 (44) GSTL 99 (T-Kol)] observed as follows:
"13.It is my considered view that 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, I find denial of refund claim on this ground is not sustainable. Regarding re-conciliation of Service Tax payment with evidence of challans, I find that the same was produced before the lower authority and also before me and the same is satisfactory.
25 Service Tax Appeal No.70377-70379 & 70381 of 2020
13. 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, I find 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."
3.7 Thus I do not find merits in the impugned orders denying the CENVAT Credit/ Refund claims filed by the party in terms of the Notification No 40/2012-ST and 12/2013-ST on the grounds stated therein. However for determination of the refund claims in light of the above observations matter is to be reconsidered by the original authority.
4.1 Appeals are allowed and the matter remanded to the original authority for reconsideration of the refund claims in the light of the observations made in this order.
4.2 As the issue is in respect of the refund claims filed in the year 2013 & 2015, Original Authority is directed to finalize the refund claims in remand proceedings within three months of the receipt of this order.
(Operative part of the order pronounced in open court) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp