Tribunal exempts SEZ unit from service tax under Notification 9/2009-ST. Precedents support tax exemption.

The Tribunal ruled in favor of the appellant, holding that services provided to a unit within a Special Economic Zone (SEZ) were exempt from service tax liability under Notification No. 9/2009-ST and its amendments. Citing legal precedents such as Norasia Container Lines and Orix Auto Infrastructure Services Ltd, the Tribunal clarified that services used for authorized operations within the SEZ were not subject to service tax. The decision in Reliance Ports and Terminals Ltd further supported this position, emphasizing the exemption available to SEZ units under the SEZ Act, 2005. Consequently, the Tribunal set aside the demand raised by the Revenue, allowing the appeal in favor of the appellant.

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Issues:
1. Whether the appellant is liable to discharge service tax liability on "courier services" rendered to a unit situated in SEZ or otherwise.

Analysis:
The appeal in question was directed against a specific order-in-appeal dated 22/02/2016. The central issue revolved around determining the appellant's liability to discharge service tax on courier services provided to a unit within a Special Economic Zone (SEZ). The appellant had claimed exemption under Notification No. 9/2009-ST and 17/2011-ST, arguing that the services were not wholly consumed within the SEZ. The Revenue contended that the exemption applied only if the services were entirely consumed within the SEZ, leading to a demand being raised and confirmed. Both lower authorities interpreted the term "wholly consumed" to deny the appellant the benefit of exemption.

Upon reviewing Notification No. 9/2009-ST and its amendments, the Tribunal noted that the exemption applied to services rendered to developers or units in SEZ for consumption within the SEZ. Reference was made to the interpretation of the phrase "wholly consumed" in a previous case, Norasia Container Lines Vs CCE New Delhi, where it was held that services used for authorized operations within the SEZ were exempt from service tax liability. Another case, Orix Auto Infrastructure Services Ltd Vs CST Mumbai, supported this interpretation, relying on the Norasia Container Lines decision.

A more recent case, Reliance Ports and Terminals Ltd Vs CCE Thane, further reinforced the position that services provided to SEZ units were not subject to service tax under Section 26(1)(e) of the SEZ Act. The Tribunal emphasized that Notification No. 9/2009-ST and its amendments were issued to operationalize the exemption available to SEZ units under the SEZ Act, 2005. Based on these legal precedents and interpretations, the Tribunal concluded that the impugned order was unsustainable and set it aside, thereby allowing the appeal in favor of the appellant.

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