2015 (4) TMI 394 - AT - Service Tax

Refund claims allowed under specific notification, SEZ Act prevails, remand for further examination

The Tribunal allowed refund claims for services used before commercial production under Notification No.9/2009-ST, citing their importance in the ... Denial of refund claim - SEZ - Held that:- Under Section 7 and 26 of the SEZ Act 2005, the taxable service provided to developer or unit to carry out authorized operation in SEZ is exempted from service tax. The Notification No.9 /2009- ST, cannot disentitle the immunity enjoyed by SEZ Act. - Advocate placed a statement/chart before the Bench. But, all other issues are not clear from the said statement, as stated by the ld.Authorised Representative. Both sides failed to demonstrate and clarify the other issues, where the refund claims were denied and it is difficult for the Bench to decide the other issues. - other issues should be examined by the Adjudicating Authority in the light of the decisions placed by ld. Advocate . It is seen that in the impugned orders, the Commissioner (Appeals) also had not split up the issues pertaining to admissibility of refunds in respect of individual service for reason other than the reasons covered in the judgment of CST Vs Zydus Technologies Ltd (2014 (5) TMI 100 - GUJARAT HIGH COURT) and Intas Pharma Ltd Vs CST [2013 (7) TMI 703 - CESTAT AHMEDABAD] and Tata Consultancy Services Ltd. [2012 (8) TMI 500 - CESTAT, MUMBAI] - Matter remanded back - Decided in favour of assessee. Issues Involved:Refund claims under Notification No.9/2009-ST for services used before commercial production; Refund claims for services wholly consumed within SEZ; Other issues leading to denial of refund claims.Analysis:Issue 1: Refund claims under Notification No.9/2009-ST for services used before commercial productionThe appellants contended that they paid service tax before commercial production and were eligible for a refund under Notification No.9/2009-ST. The Advocate argued that their case was supported by precedent cases like Zydus Tech. Ltd and CST Vs Zydus Technologies Ltd. The Revenue argued that services should be used in authorized SEZ operations for refund eligibility. The Tribunal referred to the decision of the Gujarat High Court in Cadila Healthcare Ltd., supporting the appellants' claim for refund even for services used before final production, as they were integral to the manufacturing process. The Tribunal upheld the refund claim for services used pre-commercial production.Issue 2: Refund claims for services wholly consumed within SEZThe appellants also claimed refunds for services entirely consumed within SEZ operations. The Tribunal referenced the case of Intas Pharma Ltd and Tata Consultancy Services Ltd, stating that services used within SEZ for authorized operations are exempt from service tax under SEZ Act provisions. The Tribunal held that Notification No.9/2009-ST could not override the immunity provided by the SEZ Act, allowing refunds for such services. The Tribunal directed the Adjudicating Authority to grant refunds for services wholly consumed within SEZ.Issue 3: Other issues leading to denial of refund claimsThe Tribunal noted that other issues leading to denial of refund claims were not adequately clarified by both parties. The Advocate provided a statement, but clarity on these issues was lacking. The Tribunal directed the Adjudicating Authority to re-examine these issues based on the legal arguments presented by the Advocate and relevant case laws. The Tribunal emphasized the need for a thorough examination of all issues affecting refund claims beyond those covered by previous judgments.In conclusion, the Tribunal set aside the impugned orders and directed the Adjudicating Authority to reassess the refund claims: (a) for services used before commercial production, (b) for services wholly consumed within SEZ, and (c) for other issues based on facts and legal precedents. The Adjudicating Authority was instructed to decide on the refund claims within three months, with the Advocate's cooperation in the proceedings.