Custom, Excise & Service Tax Tribunal
Hexaware Technologies Ltd vs Cst Ch - I on 26 June, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. I
Service Tax Appeal Nos . 41456 to 41459 of 2015
Service Tax Appeal Nos. 41461 to 41462 of 2015
(Arising out of Orders-in-Appeal Nos. 96-101/2015 (STA-I) dated 30.03.2015 passed by
Commissioner of Service Tax (Appeals-I), Newry Towers, 2054/1, II Avenue, 12th Main Road,
Anna Nagar, Chennai - 600 040)
M/s. Hexaware Technologies Limited ...Appellant
Plot No. H5, SIPCOT Information Technology Park,
Navallur Post, Siruseri,
Kanchipuram - 603 103.
Versus
Commissioner of GST and Central Excise ...Respondent
Chennai I Commissionerate,
Newry Towers, No. 2054/1,
II Avenue, 12th Main Road,
Anna Nagar,
Chennai - 600 040.
APPEARANCE:
For the Appellant : Shri H. Kumar, Advocate
For the Respondent : Shri M. Selvakumar, Authorised Representative
CORAM:
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
HON'BLE MR. AJAYAN T.V., MEMBER (JUDICIAL)
FINAL ORDER Nos. 40672-40677 / 2025
DATE OF HEARING : 23.01.2025
DATE OF DECISION : 26.06.2025
Per Mr. VASA SESHAGIRI RAO
M/s. Hexaware Technologies Limited, Siruseri,
Chennai (hereinafter referred to as 'Appellant') has filed
these 6 appeals directed against the Orders-in-Appeal Nos.
96-101/2015 (STA-I) dated 30.03.2015 passed by
2
ST/41456-41459/2015
ST/41461-41462/2015
Commissioner of Service Tax (Appeals-I), Chennai upholding
the Orders-in-Original passed by Assistant Commissioner of
Service Tax, Division III, Chennai partly sanctioning but
partly rejecting the refund claims filed by the Appellant as
per the details tabulated below: -
S.No. Appeal Nos. Appellant Respondent OIO No. / date OIA No. / Period Refund Refund
date Involved Claimed Rejected
(1) (2) (3) (4) (5) (6) (7) (8) (9)
1 ST/41456/2015 65/2011(R) Oct'09 to 66,47,964/- 52,81,564/-
dt. Dec'09
28.02.2011
2 ST/41457/2015 87/2011(R) Apr'09 to 2,29,343/- 2,29,343/-
dt. Sep'09
31.03.2011
3 ST/41458/2015 M/s. The 153/2011(R) 96- Jun'10 to 51,47,580/- 1,85,464/-
Hexaware Commissioner dt. 101/2015 Sep'10
Technologies of GST and 04.07.2011 (STA-I) dt.
4 ST/41459/2015 Limited Service Tax 152/2011(R) 30.03.2015 Apr'10 to 16,54,506/- 1,45,763/-
dt. Jun'10
04.07.2011
5 ST/41461/2015 151/2011(R) Jan'10 to 79,38,629/- 5,92,253/-
dt. Mar'10
26.06.2011
6 ST/41462/2015 181/2011(R) Oct'10 to 68,39,525/- 2,37,848/-
dt. Dec'10
13.09.2011
As the issue for determination is common in all these appeals
i.e., rejection of part of refunds filed for the period from
October 2009 to December 2010, these are taken up
together for disposal by this common order.
2.1 The relevant facts briefly stated are that the
Appellant having registered office at Navi Mumbai have
obtained Service Tax Registration for their SEZ Unit at
Siruseri mainly under the category of 'Information
Technology Software Service'. The Appellant is also engaged
in providing various other taxable services viz., Management
3
ST/41456-41459/2015
ST/41461-41462/2015
Consulting Services, Business Support Services, Sponsorship
Services, Internet Telecommunication Services, Commercial
Training and Coaching Services, Renting of Immovable
Property Services, etc. The Appellant has filed these 6
refunds under the Notification No. 09/2009-ST dated
03.03.2009 as amended claiming the service tax paid in
respect of taxable services received by them for consumption
in their unit. The Assistant Commissioner of Service Tax
while processing the above refund claims has partly rejected
the amounts as mentioned in Column No. (9) of the Table
supra on the grounds that invoices relating to Tour
Operators, Rent-a-Cab services, Business Support Services
used for conducting sports events, outdoor catering and
invoices categorized as outdoor catering but did not fall
under that service are not required to used for authorized
operations and also in respect of invoices where payment
was made more than 6 months before filing of the refund
claim.
2.2 The Notification No. 09/2009-ST dated
03.03.2009 as amended by Notification No. 15/2009-ST
dated 20.05.2009 grants exemption by way of refund to
services which are received by SEZ and are used in its
authorized operations. This Notification provides exemption
4
ST/41456-41459/2015
ST/41461-41462/2015
from payment of service tax for specified services which are
provided in relation to authorized operations in a SEZ by way
of refund. Following conditions are required to be satisfied to
be eligible for claiming the refund of the service tax paid on
these input services: -
i. The SEZ unit should use these specified services in
relation to authorized operations and
ii. These services should be approved by the Approval
Committee.
iii. No CENVAT Credit of service tax paid to be taken under
CCR, 2004.
iv. The SEZ unit must have paid the service tax and
v. The refund claim shall be filed within 6 months from
the date of payment of service tax to the service
provider. The Notification has prescribed a detailed
procedure for claiming the refund of service tax paid on
approved services and used for authorized operations
in an SEZ.
For ease of reference, the Notification No. 09/2009-ST dated
03.03.2009 referred above is extracted below: -
"NOTIFICATION NO. 09/2009-SERVICE TAX,
Dated: March 3, 2009
Superceded vide Notification no. 17/2011 ST dated
1.3.2011
Exemption to Services Provided in relation to authorized
operations in a Special Economic Zone (SEZ) and received
by a developer or units of a sez
5
ST/41456-41459/2015
ST/41461-41462/2015
G.S.R. 146(E). - In exercise of the powers conferred by sub-
section (1) of section 93 of the Finance Act, 1994 (32 of
1994), and in supersession of the notification of the
Government of India, Ministry of Finance ( Department of
Revenue), No. 4/2004-ServiceTax, dated the 31st March, 2004,
published in the Gazette of India, Extraordinary, Part II, Section
3, Sub-section (i) dated the 31st March, 2004, vide,
G.S.R.248(E), dated the 31st March, 2004, except as respects
things done or omitted to be done before such supersession, the
Central Government, on being satisfied that it is necessary in the
public interest so to do, hereby exempts the taxable services
specified in clause (105) of section 65 of the said Finance Act,
which are provided in relation to the authorised operations in a
Special Economic Zone, and received by a developer or units of a
Special Economic Zone, whether or not the said taxable services
are provided inside the Special Economic Zone, from the whole
of the service tax leviable thereon under section 66 of the said
Finance Act:
Provided that-
(a) the developer or units of Special Economic Zone shall
get the list of services specified in clause (105) of section 65 of
the said Finance Act as are required in relation to the authorised
operations in the Special Economic Zone, approved from the
Approval Committee (hereinafter referred to as the specified
services);
(b) the developer or units of Special Economic Zone
claiming the exemption actually uses the specified services in
relation to the authorised operations in the Special Economic
Zone;
1
[(c) the exemption claimed by the developer or units of
Special Economic Zone shall be provided by way of refund of
service tax paid on the specified services used in relation to the
authorised operations in the Special Economic Zone except for
services consumed wholly within the Special Economic Zone;]
2
[(d) the developer or units of Special Economic Zone
claiming the exemption, by way of refund in accordance with
clause (c), has actually paid the service tax on the specified
services;]
(e) no CENVAT credit of service tax paid on the specified
services used in relation to the authorised operations in the
Special Economic Zone has been taken under the CENVAT Credit
Rules, 2004;
(f) exemption or refund of service tax paid on the specified
services used in relation to the authorised operations in the
Special Economic Zone shall not be claimed except under this
notification.
3
[(g) the developer or unit of a Special Economic Zone
shall maintain proper account of receipt and utilisation of the
taxable services for which exemption is claimed.]
6
ST/41456-41459/2015
ST/41461-41462/2015
2. The exemption contained in this notification 4[except for
services consumed wholly within the Special Economic Zone,
shall be subject to the following conditions], namely:-
(a) the person liable to pay service tax under sub-section
(1) or sub-section (2) of section 68 of the said Finance Act shall
pay service tax as applicable on the specified services provided
to the developer or units of Special Economic Zone and used in
relation to the authorised operations in the Special Economic
Zone, and such person shall not be eligible to claim exemption
for the specified services:
Provided that where the developer or units of Special Economic
Zone and the person liable to pay service tax under sub-section
(2) of section 68 for the said services are the same person, then
in such cases exemption for the specified services shall be
claimed by that person;
(b) the developer or units of Special Economic Zone shall
claim the exemption by filing a claim for refund of service tax
paid on specified services;
(c) the developer or units of Special Economic Zone shall
file the claim for refund to the jurisdictional Assistant
Commissioner of Central Excise or the Deputy Commissioner of
Central Excise, as the case may be;
(d) the developer or units of Special Economic Zone who is
not registered as an assessee under the Central Excise Act, 1944
(1 of 1944) or the rules made thereunder, or the said Finance
Act or the rules made thereunder, shall, prior to filing a claim for
refund of service tax under this notification, file a declaration in
the Form annexed hereto with the respective jurisdictional
Assistant Commissioner of Central Excise or the Deputy
Commissioner of Central Excise, as the case may be;
(e) the jurisdictional Assistant Commissioner of Central
Excise or the Deputy Commissioner of Central Excise, as the
case may be, shall, after due verification, allot a service tax code
(STC) number to the developer or units of Special Economic
Zone within seven days from the date of receipt of the said
Form;
(f) the claim for refund shall be filed, within six months or
such extended period as the Assistant Commissioner of Central
Excise or the Deputy Commissioner of Central Excise, as the
case may be, shall permit, from the date of actual payment of
service tax by such developer or unit to service provider;
(g) the refund claim shall be accompanied by the following
documents, namely:-
(i) a copy of the list of specified services required in
relation to the authorised operations in the Special
Economic Zone, as approved by the Approval
Committee;
(ii) documents for having paid service tax;
(iii) a declaration by the Special Economic Zone
developer or unit, claiming such exemption, to the effect
7
ST/41456-41459/2015
ST/41461-41462/2015
that such service is received by him in relation to
authorised operation in Special Economic Zone.
(h) the Assistant Commissioner of Central Excise or the
Deputy Commissioner of Central Excise, as the case may be,
shall, after satisfying himself that the said services have been
actually used in relation to the authorised operations in the
Special Economic Zone, refund the service tax paid on the
specified services used in relation to the authorised operations in
the Special Economic Zone;
(i) where any refund of service tax paid on specified
services is erroneously refunded for any reasons whatsoever,
such service tax refunded shall be recoverable under the
provisions of the said Finance Act and the rules made
thereunder, as if it is a recovery of service tax erroneously
refunded.
3. The exemption contained in this notification shall apply only in
respect of service tax paid on the specified services on or after
the date of publication of this notification in the Official Gazette.
4. Words and expressions used in this notification and defined in
the Special Economic Zones Act, 2005 (28 of 2005) or the rules
made thereunder, shall apply, so far as may be, in relation to
refund of service tax under this notification as they apply in
relation to a Special Economic Zone."
2.3 Thus these six refund claims have been filed by
the Appellant in terms of the above Notification which
exempts taxable services provided in relation to authorized
operations in an SEZ by way of refund to the developer or
the unit in the SEZ. The Notification interalia provides the
developer / the units of SEZ shall get the list of services
specified in clause 105 of Section 65 of the Finance Act, 1994
as are required for authorized operations in the SEZ and use
the specified services in relation to the authorized operations
in the SEZ to be approved by the Approval Committee. The
refund is subject to the condition interalia that the claim
8
ST/41456-41459/2015
ST/41461-41462/2015
should be filed within 6 months from the date of actual
payment of service tax by the unit or the developer to the
service provider. Further, the exemption is applicable only in
respect of service tax paid of the specified services on or
after the date of publication of Notification which is
03.03.2009.
3.1 The Ld. Advocate Mr. H. Kumar has appeared for
the Appellant and submitted a list of invoices along with the
date, amount of service tax paid, type of service and
whether filed within 6 months or not as extracted below. The
reasons for rejection of the amount of service tax claimed as
refund by the unit on the following grounds: -
i. Invoices for which service tax has been paid to the
provider before 03.03.2009.
ii. Invoices relating to Tour Operators / Outdoor Catering.
iii. Invoices categorized as 'Outdoor Catering', but which
may not fall under that service and
iv. Invoices for which payments have been made more
than six months before filing the refund claim.
9
ST/41456-41459/2015
ST/41461-41462/2015
3.2 In respect of invoices relating to tour operators,
the Ld. Advocate has submitted that for its business
purposes, conducting of client meetings & incurring
10
ST/41456-41459/2015
ST/41461-41462/2015
expenditure on food delivered at their office have to be
treated as being used for authorized operations. In respect of
tour operator service, he submits that it is related to bus
services provided to their employees as the place where the
office of the Appellant is located is very far from the city
necessitating the Appellant arranging bus facility for smooth
commutation of employees for coming to the office and back.
As such, the services provided have to be treated as in
relation to authorized operations as these are essential for
the functioning of the unit. He has further submitted that
tour operators' service and outdoor catering service are
covered in the list of approved services by the Development
Commissioner, SEZ. He would submit that the refund claims
were not filed under the provisions of the CENVAT Credit
Rules, 2004 but under the Notification No. 09/2009-ST dated
03.03.2009 where the only requirement is that the services
for which refund is claimed should be included in the list of
specified services approved by the Developer Commissioner
and are to be used for the authorized operations. The
Original Authority and as well as the Appellate Authority
have erred in rejecting their refunds on the ground that, the
services are not used for the authorized operations or having
not been qualified as input services under CENVAT Credit
Rules, 2004 relying on the decisions in the case of Vision Pro
11
ST/41456-41459/2015
ST/41461-41462/2015
Event Management Vs. Commissioner of Central Excise &
Service Tax, Chennai [2019 (365) ELT 555], wherein the
Tribunal, Chennai Bench held that once the input services
are approved by the Development Commissioner, the
Department cannot contend that the said input services are
not eligible for refund or these are not consumed within SEZ
and also in the case of Symantec Software and Services
India Pvt. Ltd. Vs. Commissioner of GST & CE, Chennai
South [Service Tax Appeal no. 40050 of 2019], wherein the
Tribunal, Chennai Bench held that once the input services
are approved by the approval committee as services for
authorized operations, the Department cannot reject the
refund claim stating that these are used only for facilitation
of employees and not for authorized operations.
3.3 He has also submitted that the other ground for
rejection of refund is that certain invoices received by the
Appellant from its vendors classifying services covered under
those invoices as outdoor catering service but actually could
not be considered as such. He has argued that it is a settled
position in law that classification of service adopted by the
vendor cannot be challenged at the Recipient's end i.e. at the
Appellant's end. Once the Revenue has accepted the
classification of service as outdoor catering at the service
12
ST/41456-41459/2015
ST/41461-41462/2015
provider's end, the jurisdictional officer of the Appellant who
is the recipient of the service, cannot question such
classification. For this proposition the Appellant relies upon
the following cases: -
i. Commissioner of Central Excise & Customs vs. MDS
Switchgear Ltd, [2008 (229) E.L.T. 485 (S.C.)],
wherein the Hon'ble Supreme Court held that
quantum of duty already determined by the
jurisdictional officers of the supplier unit cannot be
con tested or challenged by the officers in charge of
the recipient unit.
ii. Commissioner of Central Excise, Ahemdabad III vs.
Nahar Granites, [2014-TIOL-582-HC-AHM-CX),
wherein the Hon'ble Gujarat High Court held that,
once classification has not been disputed at the
manufacturer's end, then Cenvat credit on such duty
cannot be declined to the purchaser of the goods
who otherwise fulfilled all conditions for availing
Cenvat Credit thereof.
3.4 Further, he has contended that another ground
for rejection of the refund claims is that the Appellant has
filed the refund claims after six months from the date of
payment to the vendor. In this regard, it is submitted that at
the time of filing the application itself, vide Letter dated
14.05.2010, the Appellant had provided the reason which
caused delay in filing its refund applications and sought
13
ST/41456-41459/2015
ST/41461-41462/2015
condonation of such delay. The Notification grant discretion
to the Adjudicating Authority to consider the reason and
condone the delay in filing the refund application. Without
examining the reason provided by the Appellant, the refunds
are rejected, by both the Lower Authorities in a non-
speaking manner which is not permitted in law. Without
prejudice to the above, the intention of the exemption
provided is to effectuate the larger objective of the SEZ Act,
2000, specifically, Sections 51 and 26 thereof which grants
exemption to all the services that are used by the SEZ Unit.
SEZ Act, 2000 has an over-riding effect over the other Acts
including the Finance Act, 1994. Therefore, in a situation
where the notification itself grants discretion to the officer to
condone the delay, which is procedural in nature, denial to
exercise such discretion is arbitrary and prayed to set aside.
He has further informed that in the Appellant's own case for
the period January 2010 March 2010, the refund processing
authority vide Order-in-Original dated 29.06.2011 had
exercised its discretion and condoned the delay in filing of
the refund application for the said period.
4.1 The Ld. Authorized Representative Mr. M.
Selvakumar representing the Revenue has argued that the
Appellant is not eligible for filing the refund claims of service
14
ST/41456-41459/2015
ST/41461-41462/2015
tax paid on those invoices which were dated earlier to the
issuance of the Notification No. 09/2009-ST dated
03.03.2009. He has drawn our attention to the findings of
the Original Adjudicating Authority that tour operator
services and outdoor catering services are not services that
can be considered as having been used in the authorized
operations of the unit but are staff welfare / entertainment
measures. He has referred to the findings of the Original
Adjudicating Authority in Orders-in-Original to press the
point that these services could not be considered to have
been used in connection with authorized operations.
4.2 He has referred to paragraph 9 of the Order-in-
Original No. 65/2011 (R) dated 28.02.2011, wherein the
Adjudicating Authority has observed that 'Tour Operator
services' and 'Outdoor Catering Services' are not services
that can be considered as having been used in the
'authorized operations' of the unit but are staff
welfare/entertainment measures. To highlight that such
services cannot be considered as having been consumed for
the authorised operations, in some of the invoices issued by
Sabari Inn Private Limited and Quality Inn MGM Resorts
which have been included in the category of 'Outdoor
Catering' by the unit, that the items billed includes Wine,
15
ST/41456-41459/2015
ST/41461-41462/2015
Vodka, Rum etc. Further, the charges also include Banquet
Hall charges / Restaurant charges / Music System / Room
service etc., which shows that the invoices do not relate to
'outdoor catering' but for in-house services of the hotels.
4.3 The Ld. Authorized Representative has further
pointed that an excess amount of Rs.3,06,113/- was paid
which cannot be treated as relating to taxable services.
Further, in respect of one challan dated 16.10.2009, an
amount of Rs.1,64,320/- which was paid towards the interest
and delayed payment of service tax was included for
claiming refund of service tax paid which cannot be
categorized to have been used for authorized operations. He
prayed for rejection of the appeals filed as the Lower
Authorities have examined all the documents relating to their
eligibility for service tax refund.
5. We have heard both sides and perused the
records and also the case laws relied upon.
6. The only issue that is required to be determined
in these appeals is whether rejection of refund claims is
justified or not?
16
ST/41456-41459/2015
ST/41461-41462/2015
7. The Appellant has filed 6 refund claims as
detailed in the above table supra for the period from October
2009 to December 2010 under the Notification No. 09/2009-
ST dated 03.03.2009 as amended. The Original Adjudicating
Authority after going through all the invoices furnished by
the Appellant have sanctioned part of the refund claims while
rejecting other part for various reasons which are
categorized as given below: -
i. Invoices for which service tax has been paid to the
provider before 03.03.2009.
ii. Invoices relating to Tour Operators / Outdoor Catering.
iii. Invoices categorized as 'Outdoor Catering', but which
may not fall under that service and
iv. Invoices for which payments have been made more
than six months before filing the refund claim.
8. The details of the invoices along with date and
type of invoices and the amount of service tax involved etc.,
are given in the Annexure to the Show Cause Notice as
tabulated in paragraph 3.1 supra. To avail the benefit of
exemption of the above Notification, the Appellant is required
to pay service tax on the services utilized in connection with
the authorized operation and also the services should be
17
ST/41456-41459/2015
ST/41461-41462/2015
approved by the Approval Committee for their use for
authorized operations in SEZ.
9. The said Notification providing for a refund of
service tax paid on input services has come into effect from
03.03.2009. As such, invoices listed at Sl.Nos. 1-7 in the
above table on which the Appellant has claimed refund are
not eligible as the Appellant has included these invoices for
which payment has been made before 03.03.2009, the date
on which said Notification came into effect. The Appellant is
not eligible for exemption as can be made applicable only in
respect of service tax paid after that date i.e., 03.03.2009.
The Appellant during the submissions before the Tribunal has
categorically indicated that they have foregone these
amounts even before the Appellate Authority. In respect of
other invoices, the claim for service tax refund has been
rejected which are pertaining to tour operator and outdoor
catering, commercial training and information technology
services for the reason that these are not filed within 6
months from the date of payment of service tax as
prescribed under 2(f) of the aforesaid Notification. The other
grounds raised for rejecting the refund claims filed are that
in respect of outdoor catering and tour operator services
could not be treated as utilized for authorized operations.
18
ST/41456-41459/2015
ST/41461-41462/2015
However, the Ld. Advocate has relied upon decisions in the
cases of Vision Pro Event Management Vs. Commissioner of
Central Excise & Service Tax, Chennai [2019 (365) ELT 555]
and also Symantec Software and Services India Pvt. Ltd. Vs.
Commissioner of GST & Central Excise, Chennai South
[Service Tax Appeal No. 40050 of 2019] wherein the Tribunal
held that once the input services are approved by the
Approval Committee as services for authorized operations,
the Department cannot reject the refund claim stating that
these are used only for facilitation of employees and not for
authorized operations. The Appellant has also submitted that
they are used for conducting the client meetings which is an
important function and definitely relating to the authorized
operations and refund cannot be rejected on this pretext and
the tour operator service is essential for carrying the
employes 'to and fro' to the unit which is required for smooth
functioning. These are genuinely required for the Appellant's
business and so denial of refund on these grounds is not
justified.
10. The Adjudicating Authority has relied upon the
Circular No. 120/01/2010-ST dated 19.01.2010 to deny the
benefit of outdoor catering services and also tour operator
services commenting that there is no sufficient nexus
19
ST/41456-41459/2015
ST/41461-41462/2015
between the services and authorized operations as detailed
in para 3.1.2 as below: -
"3.1.2 Therefore, the phrase, "used in" mentioned in
Notification No. 5/2006-CX (NT) to show the nexus
also needs to be interpreted in a harmonious
manner. The following test can be used to see
whether sufficient nexus exists. In case the absence
of such input/input service adversely impacts the
quality and efficiency of the provision of service
exported, it should be considered as eligible input or
input service. In the case of BPOs/call centres, the
services directly relatable to their export business are
renting of premises; right to use software;
maintenance and repair of equipment;
telecommunication facilities; etc. Further, in the
instant example, services like outdoor catering or
rent-a-cab for pick-up and dropping of its employees
to office would also be eligible for credit on account of
the fact that these offices run on 24 x 7 basis and
transportation and provision of food to the employees
are necessary pre-requisites which the employer has
to provide to its employees to ensure that output
service is provided efficiently. Similarly, since
BPOs/call centres require a large manpower, service
tax paid on manpower recruitment agency would also
be eligible both for taking the credit and the refund
thereof. On the other hand, activities like event
management, such as company-sponsored
dinners/picnics/tours, flower arrangements, mandap
keepers, hydrant sprinkler systems (that is, services
which can be called as recreational or used for
beautification of premises), rest houses etc. prima
facie would not appear to impact the efficiency in
providing the output services, unless adequate
justification is shown regarding their need."
A perusal of this Circular makes it all the more clear that tour
operator service, rent-a-cab service and outdoor catering
service once approved cannot be termed as not used for
authorized operations.
20
ST/41456-41459/2015
ST/41461-41462/2015
11. Thus, considering the explanation given by the
Appellant, we do not find any justification for rejecting the
service tax refund claim on tour operator services and
outdoor catering services when these services are approved
by the Approval Committee and also used for authorized
operations.
12. In the case of Commissioner of Service Tax,
Pune Vs. Eaton Technologies Pvt. Ltd. [2017 (47) STR 355
(Tri.-Mumbai)], the Tribunal held as follows: -
"6. It is not in doubt that the services which were
provided to the respondent were taxable and that the
service tax on the supplied services had been
discharged. The sole issue for determination is
whether services for which tax has been collected
along with consideration by the provider have been
utilised in connection with the authorized operations
for which the competent authority is the Development
Commissioner. There is no finding that these are not
approved services. The assessment to tax and the
exemption provided under Notification No. 40/2012-
S.T. merely lays down the procedure for
reimbursement of a tax that should not have been
collected in the first place. That it was collected is
attributable to the caution exercised by the service
provider who would rather not tangle with the possible
intransigence on the part of service tax officers. No
evidence has been produced to show that M/s. Mayur
21
ST/41456-41459/2015
ST/41461-41462/2015
Hotels has not rendered 'outdoor catering service' or
provided catering service outside the zone. In these
circumstances, there is no ground to warrant
interference in the impugned order."
13. Major and significant portion of the refund claims
filed have been rejected as the same are not filed within 6
months from the date of payment of service tax as per the
condition mentioned at 2(f) of the Notification ibid. The
condition mentioned at 2(f) of the Notification No. 09/2009-
ST dated 03.03.2009 is extracted below: -
"2. ...
(f) the claim for refund shall be filed, within six
months or such extended period as the Assistant
Commissioner of Central Excise or the Deputy
Commissioner of Central Excise, as the case may be,
shall permit, from the date of actual payment of
service tax by such developer or unit to service
provider;"
A perusal of the above condition indicates that when there is
a delay in filing the refund claim, the Assistant Commissioner
or the Deputy Commissioner of Central Excise have been
endowed with authority to allow extension of time for filing
the claims.
22
ST/41456-41459/2015
ST/41461-41462/2015
14. We find in these appeals, the Ld. Advocate has
advanced the reason that the delay is caused by the
Consultant in filing the claims. In the case of Vedanta
Aluminium Limited Vs. Commissioner of Central Excise and
Service Tax, Bhubaneswar [2024 (3) TMI 1325-CESTAT
KOLKATA], the Tribunal Kolkata has held as follows: -
"7.1. The appellant contends that the SEZ Act, being a specialized act, is
having overriding effect over any other act. Accordingly, it is their
contention that a notification issued under Service Tax cannot restrict or
provide a time-limit for grant of refund of Service Tax which is not payable
under the SEZ Act.
7.2 We find that the contention raised by the appellant has been
considered by the Tribunal, New Delhi in the case of M/s. SRF Ltd. (supra)
wherein the Tribunal observed as under: -
"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
23
ST/41456-41459/2015
ST/41461-41462/2015
services supplied for authorised operations of SEZ developers and
units covered by Section 26 remains. Without such a legal
authority, no tax or duty 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.
.
.
.
48. Thus, as the charge of service tax under the Finance Act, 1994 on the services provided for authorised operations of the appellant are overridden by section 51 of the SEZ Act, 2005, any exemption notifications for such services as well as the conditions laid down in them are redundant. Service tax, if any, paid on such input services for authorised operations need to be refunded to the appellant. We also find no force in the other grounds raised for denying the refund of service tax paid and discussed above.
49. The denial of refund of service tax to the appellant in these five appeals is not sustainable and, accordingly, we find that appeals need to be allowed and the impugned orders need to be set aside." 7.3 This view was also taken in the case of DLF Assets Pvt. Ltd. (supra) wherein it has been held as under: -
"18. The contention advanced by the Learned Counsel for the appellant has force. As noticed above, Section 26(1) of the SEZ Act provides that subject to the provisions of the sub-section (2), every Developer shall be entitled to exemptions and the exemption at (e) exempts every Developer from service tax under Chapter-V of the Finance Act on taxable services provided to a Developer or unit to carry on the authorized operations in a SEZ. Section 51 of the SEZ Act provides for an overriding effect to the provisions of the SEZ Act. The provisions of Section 26 read with Rule 31 of the SEZ Rules thus, have overriding effect over anything inconsistent contained in any other law for the time being in force, which would include the Finance Act. It needs to be noted that the Notification 24 ST/41456-41459/2015 ST/41461-41462/2015 dated March 3, 2009 has been issued in exercise of the powers conferred by Section 93 of the Finance Act. Thus, when 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 under the Notification issued under the Finance Act would be inconsistent with the provisions of the SEZ Act. It also needs to be noted that the SEZ Act was enacted in 2005, much after the enactment of the Finance Act in 1994.
.
.
.
21. Thus, what follows is that the Commissioner was not justified in examining whether the conditions set out in the Notification dated March 3, 2009 were satisfied or not for grant of any exemption from service tax. Section 26(2) of the SEZ Act does provide that the Central Government may prescribe the manner in which, and the terms and conditions subject to which, the exemptions shall be granted to the Developer under sub-section (1) but what is important to notice, and as was also observed by the Andhra Pradesh High Court, the word "prescribe" would mean "prescribed by rules made by the Central Government under the SEZ Act," in view of the definition of "prescribed" under section 2(w) of the SEZ Act. The Notification dated March 3, 2009, which has been issued under Section 93 of the Finance Act, therefore, has no application."
7.4 In the view of Section 26(1) of the SEZ Act read with Rule 31 of the SEZ Rules, we observe that the conditions of Notification No. 09/2009- S.T. are clearly repugnant and inapplicable. This is because Section 51 of the SEZ Act grants overriding power to the provisions of the SEZ Act. We find that the Tribunal, New Delhi in the case of M/s Lupin Ltd. (supra) has held this view and the observations of the Tribunal are reproduced as under: -
"21. From the aforesaid, it is evident that the appellant fulfilled the criterias of eligibility to claim refund of the service tax paid on input services in terms of the Notification No 12/2013-ST. Infact it is not the case of the revenue that the appellant is not eligible to make such claims. Their only objection is to the claim being filed beyond the period of one year as per the notification. We are of the considered opinion that once the appellant is found to be eligible to claim the refund, the substantive conditions are complied with and the condition of time limit for making the claim under the notification being only a procedural requirement, needs to be construed liberally. Considering the beneficial object of establishing the SEZ tax free, without any burden of duties, the procedural lapse, if any, 25 ST/41456-41459/2015 ST/41461-41462/2015 cannot be the basis to deny the refund to the appellant. The exemption is intended to be absolute is further evident from para 3 (11) of the Notification which provides for ab-initio exemption. This strengthens our conclusion that the SEZ Act and the Rules read with the notification is intended to be a beneficial policy for the SEZ, therefore has to be construed liberally. In our view we are supported by the decision of the Apex Court in Government of Kerala &Anr. Vs. Mother Superior Adoration Convent (supra), where it has been held that the beneficial purpose of the exemption must be given full effect to and before interpreting a statute, "we must first ask ourselves what is the object sought to be achieved by the provision and construe the statute in accordance with such object". The Court went ahead to hold that in the event of any ambiguity in such construction, such ambiguity must be in favour of that which is exempted. On the principle that there is a clear distinction between exemptions which are to be strictly interpreted as opposed to beneficial exemptions having the purpose of encouragement or promotion of certain activities, the Court relied on several decisions. ....
8. The appellant also contended that in terms of Notification No. 09/2009- S.T. exemption is granted by way of refund of Service Tax in situations where services are not wholly consumed in the SEZ. Whereas for the services which are wholly consumed in SEZ, the appellant need not pay service tax at all because the assessee is eligible for outright unconditional exemption for the services wholly consumed in the SEZ. This change was brought about by Notification No. 15/2009-S.T. dated 20.05.2009. 8.1 We agree with the above contention of the appellant. If Service Tax is paid with respect of services which are wholly consumed within the SEZ, it would be the case of Service Tax wrongly paid, as no service tax is otherwise payable. In that case the refund claim of the assessee would not be covered by Notification No. 09/2009-S.T., but rather it would be covered under Section 83 of the Finance Act read with Section 11B of the Central Excise Act, 1944. In such a case the time period for filing the refund claim is one year and the appellant has filed the refund claim within this period of one year. Accordingly, the refund claim can be considered to be filed within the prescribed time-limit. We find that a similar view has been taken by the Tribunal in the case of M/s. Tata Consultancy Services Ltd. (supra)."
26
ST/41456-41459/2015 ST/41461-41462/2015
15. Further, in the case of Congnizant Technology Solutions India Pvt. Ltd. Vs. Commissioner of Central Excise & Service Tax, Chennai [2021 (10) TMI 642-CESTAT CHENNAI], the Tribunal held as follows: -
"It is not disputed that all claims had been filed on or before the last date for filing the refund claims. These were returned by issuing Deficiency Memo since the appellant had not furnished necessary documents - It can be seen from the Deficiency Memo that the refund claim is returned to the appellant. There is no decision on merits; there is no application of mind or a speaking order rejecting the claim.
In the present case, the appellant has filed the refund claims originally within a period of one year and therefore, the date on which the claims were re-submitted along with documents cannot be considered to be the date of filing claim so as to deny the refund on the ground of limitation - The Tribunal in the case of BALMER LAWRIE & CO. LTD. VERSUS COMMISSIONER OF C. EX., KOLKATA-VI [2014 (8) TMI 977 - CESTAT KOLKATA] considered a similar issue and held that when the claim has been filed within the limitation period of one year and returned by the Department for removal of defects, the date of subsequent re-submission cannot be taken as the date on which the claim is filed afresh.
This issue as to whether the terms and conditions prescribed in the Service Tax Notifications will prevail over Section 26 of the SEZ Act, 2005 read with Section 51 of the SEZ Act, 2005 was analysed by the Hon'ble High Court of Telangana and Andhra Pradesh in the case of GMR AEROSPACE ENGINEERING LIMITED AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT]. This Tribunal in the case of M/S. TVS LOGISTICS SERVICES LTD. VERSUS THE PRINCIPAL COMMISSIONER OF SERVICE TAX CHENNAI SOUTH COMMISSIONERATE [2021 (8) TMI 450 - CESTAT CHENNAI] has applied the above decision of the Hon'ble High Court of Telangana and Andhra Pradesh and held that Section 51 of the SEZ Act, 2005 has an 27 ST/41456-41459/2015 ST/41461-41462/2015 overriding effect. The denial of the benefit of exemption by relying upon procedural requirement of a Notification would be against the provisions laid down in the SEZ Act.
The terms and conditions of the Notifications (04/2004-ST, 09/2009-ST and 17/2011-ST, as applicable for different periods) cannot be pressed into application to deny the substantive benefit of exemption enshrined in Section 26 of the SEZ Act, 2005 - the rejection of refund claims on the ground of being time-barred cannot sustain and requires to be set aside."
16. In view of the above discussion and appreciating the facts and applying the ratio of the above decisions relied upon, we are of the view that once the services are approved by the Approval Committee and are utilized in relation to the authorized operations in SEZ, rejecting a part of the claims is not in order as above. However, the Refund Sanctioning Authority has to satisfy himself that these input services are approved by the Approval Committee, due service tax has been paid, no CENVAT credit on these services availed and are used for authorized operations.
17. In summary, the Appellant has foregone the service tax amount involved on those invoices which are paid before the Notification No. 09/2009-ST dated 03.03.2009 came into effect. Further, the Appellant has wrongly produced invoices which are totally unrelated to authorized operations like invoices pertaining to interest paid, 28 ST/41456-41459/2015 ST/41461-41462/2015 conducting sports event and expenditure relating to services availed as detailed in Paragraph No. 4.3 above. We hold that these services cannot be treated as related to authorized operations and approve the Original Authority's denial of service tax paid in respect of these invoices. In terms of the decision of Hon'ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar & Company [2018 (361) ELT 577 (SC)], the onus is on the Appellant to prove that he has satisfied the conditions of the Notification No. 09/2009-ST dated 03.03.2009 which provides for refund of service tax paid to SEZ units.
18. In the result, the impugned Orders-in-Appeal Nos. 96-101/2015 (STA-I) dated 30.03.2015 passed by Commissioner of Service Tax (Appeals-I) is set aside on the above terms.
19. The appeals filed are allowed but for the above modification with consequential relief, if any, as per the law.
(Order pronounced in open court on 26.06.2025) Sd/- Sd/-
(AJAYAN T.V.) (VASA SESHAGIRI RAO) MEMBER (JUDICIAL) MEMBER (TECHNICAL) MK