Service tax refund for SEZ-related services fails on limitation, unjust enrichment, and non-compliance with exemption conditions.

Refund of service tax linked to SEZ-related services was found unsustainable where part of the claim was filed beyond the one-year limitation counted from the date of tax payment. Relief was also denied for services consumed outside the SEZ because the exemption applied only to consumption inside the notified area. The claim further failed for want of proof that the tax incidence had not been passed on, attracting unjust enrichment. An alternative claim under Notification No. 9/2009 was rejected because it was neither raised in the refund application nor supported by evidence of compliance with its conditions.

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Issues: (i) Whether the refund claim was barred by limitation under Section 11B. (ii) Whether refund was admissible for services consumed outside the SEZ. (iii) Whether the assessee was entitled to refund as service recipient despite the objection of unjust enrichment. (iv) Whether refund could be claimed under Notification No. 9/2009 without satisfying its conditions and without such claim being made in the refund application.

Issue (i): Whether the refund claim was barred by limitation under Section 11B.

Analysis: The refund was filed on 26.08.2009 for a period commencing from May 2007. The relevant date for limitation was taken as the date of payment of service tax, and claims pertaining to periods earlier than one year before the filing date were treated as time barred.

Conclusion: The refund claim to the extent falling beyond the limitation period was rightly held to be time barred, against the assessee.

Issue (ii): Whether refund was admissible for services consumed outside the SEZ.

Analysis: The exemption relied upon was confined to services consumed inside the SEZ. In the absence of any exemption for services consumed outside the SEZ, no refund could be granted for such portion of the claim.

Conclusion: Refund for services consumed outside the SEZ was not admissible, against the assessee.

Issue (iii): Whether the assessee was entitled to refund as service recipient despite the objection of unjust enrichment.

Analysis: A service recipient may seek refund under Section 11B if the tax burden has been borne by it and the incidence has not been passed on to another person. The finding was that no evidence was produced to show that the tax incidence had not been passed on, attracting the bar of unjust enrichment.

Conclusion: The refund claim was hit by unjust enrichment and the assessee was ineligible, against the assessee.

Issue (iv): Whether refund could be claimed under Notification No. 9/2009 without satisfying its conditions and without such claim being made in the refund application.

Analysis: The assessee had not claimed refund under Notification No. 9/2009 in the refund application, and there was no material to show compliance with the conditions attached to that notification.

Conclusion: No relief was available under Notification No. 9/2009, against the assessee.

Final Conclusion: The refund claim was not sustainable on limitation, territorial scope of exemption, unjust enrichment, or the alternative notification-based plea, and the appeal failed.

Ratio Decidendi: A refund of service tax for SEZ-related services is governed by Section 11B where no special refund procedure exists, and such refund is unavailable beyond limitation, for services outside the notified exemption, or where the claimant fails to establish that the tax burden was not passed on.

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