SEZ service tax refund under Section 11B allowed where tax was paid on otherwise exempt authorised-operation services.

Services received by a Special Economic Zone unit and consumed wholly within the SEZ remained exempt where they were provided in relation to authorised operations, despite the amended clause (c) of Notification No. 9/2009-ST excluding refund by way of exemption for such consumption. Because service tax had been paid on otherwise exempt services, the refund was not to be examined under the notification itself but under Section 11B of the Central Excise Act, 1944. On that basis, the refund claim was treated as admissible under Section 11B and the matter was remanded for fresh processing of the claim.

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Issues: Whether refund of service tax paid on services received by a Special Economic Zone unit and consumed wholly within the Special Economic Zone was inadmissible under Notification No. 9/2009-ST as amended, and whether such refund could instead be granted under Section 11B of the Central Excise Act, 1944.

Analysis: The amended clause (c) of Notification No. 9/2009-ST excludes refund by way of exemption for services consumed wholly within the Special Economic Zone. At the same time, the opening part of the notification continues to exempt services provided in relation to authorised operations in a Special Economic Zone and received by a unit therein. On that reasoning, the services in question remained exempt, and the tax paid on them was not payable. Since service tax had in fact been paid on otherwise exempt services, the refund was not to be considered under Notification No. 9/2009-ST but under Section 11B of the Central Excise Act, 1944.

Conclusion: The refund claim was held admissible under Section 11B of the Central Excise Act, 1944, and the matter was sent back for fresh processing of the refund claim.

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