SEZ service tax refund allowed where services were later approved or wholly consumed for authorised operations.

Refund of service tax under the SEZ refund scheme was treated as admissible where the services were used for authorised operations in the Special Economic Zone. Services initially omitted from the approved list, including club or association service, were later included by the approval committee, and life insurance service for employees was also approved. Services wholly consumed within the SEZ were likewise covered by the refund principle applied in earlier Tribunal decisions. On these facts, denial of refund merely for initial non-inclusion or an alleged lack of nexus was not sustainable, and the refund claim was allowed with consequential relief according to law.

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Issues: Whether refund of service tax paid on services used for authorized operations in a Special Economic Zone could be denied where the services were subsequently approved, included in the approved list, or wholly consumed within the SEZ.

Analysis: The refund claim arose under the SEZ refund notification scheme for services used in authorized operations. Club or association service was initially not in the approved list but was later included by the approval committee. Life insurance service of employees was also included in the approved list. The services wholly consumed within the SEZ were likewise covered by the refund principle applied in earlier Tribunal decisions. On these facts, denial of refund merely on the ground of initial non-inclusion or alleged lack of nexus was not sustainable.

Conclusion: Refund of service tax on the disputed services was admissible and the denial was not justified.

Final Conclusion: The impugned order was set aside and the refund claim was allowed with consequential relief according to law.

Ratio Decidendi: Where services used for authorized operations in an SEZ are subsequently approved or are otherwise shown to be covered by the approved operations, refund of service tax cannot be denied merely because of initial non-inclusion or an asserted absence of nexus.

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