Custom, Excise & Service Tax Tribunal
M/S Barclays Technology Centre India ... vs Cce, Pune-Iii on 14 November, 2014
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV APPEAL NO. ST/76 & 77/12 (Arising out of Order-in-Appeal No. PIII/RS/323 & 322/2011 dated 31.10.2011 passed by the Commissioner of Central Excise (Appeals) Pune-III.) For approval and signature: Honble Shri P.S. Pruthi, Member (Technical) =====================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
=====================================================
M/s Barclays Technology Centre India Pvt. Ltd.
: Appellant
Versus
CCE, Pune-III
: Respondent
Appearance
Shri Prasad Paranjape, Advocate
: For Appellant
Shri N.N. Prabhudesai, Supdt. (A.R.)
: For Respondent
CORAM:
HONBLE SHRI P.S. PRUTHI, MEMBER (TECHNICAL)
Date of Hearing : 14.11.2014 Date of Decision: .12.2014
ORDER NO.......................................................
Per: P.S. Pruthi:
These appeals are directed against Orders of Commissioner (Appeals) confirming the rejection of refund claims by the adjudicating authority. The issued is whether the refund is admissible to the appellant, an SEZ unit, in respect of Service Tax paid on input services i.e. Telecommunication services, Management or Business Consultants services, Information Technology Software services, Business Support services. Revenue is of the view that, under Notification No. 9/2009-S.T. dated 3rd March, 2009 as amended by Notification No. 15/2009-S.T. dated 20th May, 2009, the taxable services provided for authorised operations in a Special Economic Zone and received by the developer or units of SEZ, the refund can granted only if the services are not wholly consumed within the SEZ. In the present case as the services were wholly consumed, the refund claims were rejected.
2. Heard both sides.
3. The learned Counsel submitted that there is no dispute that the services were utilised for authorised operations. Further in this situation is revenue neutral because the appellant could have procured services without payment of Service Tax. And because Service Tax was paid by vendors, the same is refundable to the appellant. He also contended that Section 51 of the SEZ Act provides overriding authority over other Acts and therefore since tax is not payable under the SEZ Act, it can not be demanded under the Service Tax Law. He stated that the issue is no longer res integra and is decided in their favour in the case of Intas Pharma Ltd. Vs. Commissioner of Service Tax, Ahmedabad 2013 (32) STR 543 (Tri.- Ahmd.) and in their own case in CESTAT Order No. A/1324 & 1325/14/SMB/C-IV dated 12.09.2014.
4. The learned AR reiterates the findings of the Commissioner and relies on the Principal Bench judgment in the case of Everest Industry Ltd. Vs. Commissioner -2013 (31) STR 189 (Tri.-Del.) to justify their stand that refund cannot be sanctioned in such cases under Notification No. 9/2009.
5. I have considered the rival contentions. It would be useful to refer to the Notification which provides for exemption to taxable services provided to developer or units of SEZ. Extracts of the Notification are given below:-
Notification No.9/2009-ST -
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) .
(b)
(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 Notification No. 15/2009-ST -
In the said notification,-
(A) in paragraph 1, in the proviso,?
the sub-paragraph (c), the following shall be substituted, namely:-
(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;
6. I note that the SEZ Act 2005, under Section 26 (i) (e), provides that all services imported into the SEZ to carry on authorised operations in SEZ shall be exempted. Further Section 51 of this Act gives overriding effect over other Acts. This being the legal position, the condition of Notification No. 15/2009 that refund is only admissible to services which are not wholly consumed within the SEZ cannot nullify the overriding provisions of Section 51 of the SEZ Act. The law makers made different schemes, one for granting refund of tax paid on services exported into SEZ and, the other for granting outright ride to services which are provided to be wholly consumed within the SEZ. If the service provider pays Service Tax on the service provided to an SEZ unit, the recipient is bound to get refund unless assessment at the end of service provider was re-opened and refund was given to the service providers. This view is supported by the Hon'ble Supreme Court decision in the case of Commissioner of Central Excise Vs. MDS Swithgear Ltd. 2008 (229) ELT 485 (SC).
7. Notification No. 9/2009 exempts taxable service provided to SEZ units. Once refund is provided for under this Notification, the overriding authority under Section 11 (B) of the Central Excise Act as made applicable to the Finance Act, 1994, comes into play. Therefore, refund cannot be denied under the Act for procedural infraction of having paid the Service Tax which ought not to have been paid by the service provider. The matter already stands decided by the Co-ordinate Bench in the case of appellants themselves and in the case of Intas Pharma Ltd. (supra).
8. A point was raised by the learned AR that the appellants are managing various units outside of SEZ who provide services to the appellants. And by paying Service Tax on the service provided to the SEZ unit, they managed to encash unutilized CENVAT credit through the pattern of first paying Service Tax in their unit outside of SEZ and then enabling the SEZ unit to take refund. I find that such practice cannot be held to be violating the legal frame work under which recipient unit in SEZ cannot be made to suffer tax incidence. It was also argued by the learned AR that in the case of Everest Industries Ltd. (supra), the Principal Bench had rejected the refund claims in a similar case. I find that the facts in that case are different. In that case the issue was refund of CENVAT credit under Rule 5 of CENVAT Credit Rules in respect of inputs services use in the manufacture of final products cleared for export. The Tribunal held that any body other than SEZ unit cannot be allowed to claim in benefit under SEZ Act and benefit of refund of accumulated CENVAT credit on inputs used in manufacture of goods supplied to the SEZ units cannot be given. The facts of that case being at variance with the present case, I reject the contention of the learned AR.
9. Accordingly, the appeals are allowed with consequential relief, if any.
(Pronounced in Court on .........12.2014) (P.S. Pruthi) Member (Technical) Sp 6