2018 (1) TMI 268 - AT - Service Tax

Appellant granted exemption from service tax for services to SEZ units. Appeal allowed with consequential reliefs.

The Tribunal held that the Appellant was eligible for exemption from service tax on services provided to SEZ units. They set aside the impugned order and ... N/N. 9/2009 - ST dt. 03.03.2009 - denial on the ground that the Appellant was required to discharge the service tax liability and follow refund procedure prescribed under notification - Held that: - the Tribunal in case of Reliance Port and Terminals [2013 (10) TMI 339 - CESTAT AHMEDABAD] held that Section 51 of the SEZ Act which defines export shall have overriding effect in case of any inconsistent provisions in any other Act - no service tax can be levied on services provided to units situated in SEZ nothwithstanding anything contained in N/N. 9/2009-ST as amended by N/N. 15/2009-ST as the said exemptions were only to operationalise exemption from payment of duty on services supplied to SEZ unit and Developer - the Appellant are eligible for exemption from payment of service tax on services provided to SEZ unit - appeal allowed - decided in favor of appellant. Issues Involved:Whether the Appellant is eligible for exemption from payment of service tax for the period 2007-08 to 2010-11 on Manpower supplies made to SEZ Unit.Detailed Analysis:Issue 1: Eligibility for ExemptionThe Appellant sought exemption from service tax for providing services to SEZ Unit. The adjudicating authority denied the exemption, stating that the Appellant did not follow the refund procedure under Notification No. 9/2009-ST and did not disclose details in their ST-3 Return.Issue 2: Applicability of SEZ ActThe Appellant argued that they were exempted from service tax under Section 26(1)(e) read with rule 31 of SEZ Rules. They contended that the SEZ Act's provisions override any inconsistent provisions of other acts, including denial of exemption based on non-compliance with Notification No. 9/2009-ST. The Appellant cited various judgments to support their position.Issue 3: Interpretation of JudgmentsThe Appellant relied on judgments such as Rel. Ports & Ter. Ltd. and Intas Pharma Ltd., which supported their claim for exemption without the need to claim it through a refund process. The revenue, represented by the Assistant Commissioner, cited judgments like Hemraj Gordhandas and Bombay Chem. Pvt. Ltd. to argue that exemption was not available due to non-compliance with the notification.Issue 4: Tribunal's DecisionAfter considering both sides' submissions, the Tribunal found that services supplied to SEZ Units were indeed exempted under Notification No. 9/2009 as amended. The Tribunal referred to the Tata Consultancy case, which allowed for refund even if duty was paid. They also highlighted the SEZ Act's overriding effect on inconsistent provisions of other acts, as seen in the Reliance Port and Terminals case. The Tribunal concluded that no service tax could be levied on services to SEZ units, irrespective of Notification No. 9/2009-ST's conditions.Conclusion:The Tribunal held that the Appellant was eligible for exemption from service tax on services provided to SEZ units. They set aside the impugned order and allowed the appeal with consequential reliefs, if any, in accordance with the law. The judgment was pronounced in court on 13/11/2017.