SEZ construction services may qualify for refund as input services when tied to authorised operations and manufacturing activity.

Services used for constructing a factory building in an SEZ can qualify as services used in relation to authorized operations under Notification No. 9/2009-ST when the construction is integrally connected with the proposed manufacturing activity. The tribunal treated such construction-related services as falling within the concept of input services and held that they could not be excluded merely because the building was still under construction. On that prima facie basis, waiver of pre-deposit and stay of recovery were granted, and the refund claim was found to have a strong case on merits.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery in respect of the service tax refund demanded on the ground that services used for construction of the factory building in an SEZ were not used in relation to authorized operations under Notification No. 9/2009-ST.

Analysis: The refund mechanism under Notification No. 9/2009-ST extends to services received and used in relation to authorized operations. The construction of the factory building was held to be integrally connected with the appellant's proposed manufacturing activity in the SEZ. Services used for construction of a factory building were also treated as falling within the concept of input services, and such use could not be excluded merely because the building was still under construction. On a prima facie view, the appellant had a strong case on merits.

Conclusion: Waiver of pre-deposit and stay of recovery were granted in favour of the appellant.

Ratio Decidendi: Services used in the construction of a factory building for an SEZ unit can qualify as services used in relation to authorized operations for the purpose of refund eligibility under Notification No. 9/2009-ST.

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