SEZ service tax refund remains available for authorised operations, but factual nexus and documents may still require verification.

Service tax paid on services used for authorised operations in a Special Economic Zone remains refundable where the tax incidence was borne and the claim is within limitation, even if the services were wholly consumed in the SEZ. The SEZ framework treats services to an SEZ unit as deemed export and has overriding effect over inconsistent provisions, so refund cannot be denied merely because it is routed under the SEZ notification. At the same time, refund claims may require fresh factual verification where invoices, supporting documents, or nexus with authorised operations are not clearly established, and such matters can be remanded for reconsideration on evidence.

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Issues: (i) Whether service tax paid on services used in relation to authorised operations in a Special Economic Zone, including services wholly consumed within the SEZ, was refundable; (ii) whether the refund claims and related service heads required re-examination on the evidence and nexus shown.

Issue (i): Whether service tax paid on services used in relation to authorised operations in a Special Economic Zone, including services wholly consumed within the SEZ, was refundable.

Analysis: Notification No. 9/2009-S.T. granted exemption by way of refund for taxable services used in relation to authorised operations in an SEZ. The later amendment excluding services wholly consumed within the SEZ did not extinguish refund entitlement where tax had already been paid on services actually used for authorised operations. The statutory scheme under the SEZ Act treated services provided to an SEZ unit as deemed export, and the SEZ Act had overriding effect over inconsistent provisions in other laws. Refund under Section 11B was therefore available where the incidence of tax had been borne and the claim was within limitation.

Conclusion: The refund could not be denied merely because the claim was processed under the SEZ notification, and refund entitlement under Section 11B remained available in law.

Issue (ii): Whether the refund claims and related service heads required re-examination on the evidence and nexus shown.

Analysis: The record showed that several components of the refund had been rejected for want of invoices, supporting documents, or proof of nexus with authorised operations. The Tribunal found that the breakup between services wholly consumed in the SEZ and other rejected services was not clear, and the factual verification required reconsideration by the original authority after the appellants were given an opportunity to produce evidence.

Conclusion: The matter was required to be re-examined by the original authority on the basis of the legal view adopted and the supporting evidence to be furnished.

Final Conclusion: The legal position on refund of service tax for SEZ authorised operations was answered in favour of the assessee, but the individual refund claims were sent back for fresh adjudication after verification of facts and documents.

Ratio Decidendi: Where service tax has been paid on services used for authorised operations in an SEZ, refund cannot be denied solely because the claim is made under the SEZ notification, and Section 11B refund remains available when the tax incidence is borne and the SEZ statute confers overriding protection.

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