SEZ service tax refund on approved consultancy services cannot be denied for lack of commercial production or narrow nexus.

Service tax refund on Scientific and Technical Consultancy Services used by a Special Economic Zone unit for authorised operations was treated as admissible because the approved list covered scientific or technical consultancy, testing and analysis, and the services were linked to research, development, analysis and testing in the manufacturing process. The rejection was found to be misconceived where it relied on the unit not having commenced commercial production or on a restrictive view of nexus. Once the services are specifically approved and shown to relate to authorised operations, refund cannot be denied on a narrow or technical approach.

---

---

Issues: Whether refund of service tax paid on Scientific and Technical Consultancy Services was admissible when the services were stated to have been used for the authorized operations of a unit in a Special Economic Zone.

Analysis: The approved list issued by the Development Commissioner specifically included Scientific or Technical Consultancy Services and technical testing and analysis for the appellant's authorized operations. The services obtained from the service provider related to research, development, analysis and testing of the products manufactured by the appellant, which were integral to the pharmaceutical manufacturing process. The prior rejection on the grounds that the unit had not commenced commercial production, that the services were not shown to be connected with authorized operations, or that the services were not covered by the approval list, was held to be misconceived. The earlier coordinate-bench decisions, including the one dealing with similar SEZ refund claims, supported the view that once the services are shown to be used in relation to authorized operations, refund cannot be denied on a narrow or technical approach.

Conclusion: The refund claim was held to be admissible and the rejection by the lower authorities was set aside.

Final Conclusion: Service tax refund for services used in relation to authorized operations in the SEZ was allowed, and the assessee succeeded in the appeal.

Ratio Decidendi: Where services are specifically approved and are used in relation to the authorized operations of an SEZ unit, refund of service tax cannot be denied merely because the unit had not reached commercial production or because the authorities take a restrictive view of nexus.

---