2013 (10) TMI 339 - AT - Service Tax

SEZ service tax exemption upheld on services to SEZ unit during specified period.

The Tribunal allowed the appeal filed by the appellant, determining that no service tax was payable on services provided to a SEZ unit during the ... Taxable service to SEZ unit – refund rejected - refund claimed by the assessee as the recipient of the taxable service of Architect, Interior Decorator and Consulting Engineer services provided - Held that :- Rejection of the assessee’s claim was unsustainable - Notification No. 9/2009-ST enable claim of exemption by developers or units in SEZ by way of refund of service tax paid for services used in relation to authorized operations in SEZ - insofar as the claim for refund is filed within six months or within such extended period as the AC or DC of Central Excise shall permit - provisions of the 2005 Act are provided an overriding effect vide Section 51 - the immunity to service tax in respect of taxable services provided in relation to SEZ is a legislatively enjoined immunity - any service tax paid/ remitted by a service provider is liable to be refunded to the provider who has remitted service tax in relation to taxable services provided to the unit to carry on authorized operations in a SEZ – order set aside – Following decision of M/s. Intas Pharma Ltd. vs. Commissioner of Service Tax, Ahmedabad [2013 (7) TMI 703 - CESTAT AHMEDABAD] - appeal decided in favour of assessee. Issues involved:Whether service of man-power supply provided by the appellant to a unit situated in SEZ was exempted from payment service tax for a specific period due to an amendment in the relevant notification.Analysis:The appellant appealed against an order dated 19/09/2011 regarding the payment of service tax for providing man-power supply to a unit in SEZ. The main issue was whether the appellant was exempt from service tax during the period from 03/03/2005 to 20/05/2005. The appellant argued that they were always exempt from service tax under Sec. 26(1)(e) of the SEZ Act, 2005. They cited judgments like M/s. Intas Pharma Ltd. and Tata Consultancy Services Ltd. to support their claim of exemption during the mentioned period. The appellant contended that the demand was time-barred as they had mentioned duty-free service in their ST-3 returns and invoices, clearly indicating exemption under SEZ Act provisions.The Revenue, represented by Shri K. Sivakumar, supported the adjudicating authority's decision. The Tribunal analyzed the issue in detail, focusing on whether the service provider was entitled to exemption from service tax for services provided inside SEZ. The Tribunal referred to Notification No.15/2009-ST and the amendment in para 1 of Notification No.9/2009-ST, which provided exemption to service providers for services inside SEZ. The Tribunal also considered the judgment in the case of Tata Consultancy Services Ltd. v. CCE & ST (LTU) Mumbai, stating that service providers were entitled to a refund if they paid duty despite not being required to. The Tribunal cited the case of Sujana Metal Products Ltd. v. CCE, Hyderabad, where it was held that no service tax liability existed for services supplied to SEZ.The Tribunal further referenced the judgment in Intas Pharma Ltd. v. CST, Ahmedabad, highlighting the provisions of SEZ Act, 2005, and the operationalization of exemptions under Notification No.9/2009-ST and No.15/2009-ST. The Tribunal emphasized the provisions of Sec. 26(1)(e) and Sec. 51 of the SEZ Act, 2005, which exempted service tax on services provided to a SEZ unit and stated that the SEZ Act's provisions override any inconsistent laws. Consequently, the Tribunal held that the notifications were issued to operationalize the exemption available under the SEZ Act, 2005.In conclusion, the Tribunal allowed the appeal filed by the appellant based on the findings that no service tax was payable on services provided to a SEZ unit, as per the relevant provisions of the SEZ Act, 2005.