SEZ service tax refund allowed where land lease supported authorised operations and bond requirements were met.

Refund of service tax paid on lease of land was held admissible for an SEZ unit where the land was used for authorised operations approved in the Letter of Approval and the Bond-cum-LUT requirement had been satisfied. The timing of the lease deed, even if it preceded acceptance of the bond, was not treated as a bar to refund because the notification focuses on use of services for authorised SEZ operations and compliance with the prescribed bond condition. The refund claim was therefore upheld and the Revenue's challenge failed.

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Issues: Whether the SEZ unit was entitled to refund of service tax paid on lease of land used for authorized operations under Notification No. 12/2013-ST dated 01.07.2013.

Analysis: The refund notification grants exemption by way of refund of service tax paid on services used for authorized operations of an SEZ unit. The land lease was for the unit situated within the SEZ and the operations had been approved in the Letter of Approval, satisfying the principal condition of the notification. The Bond-CUM-LUT had also been executed and accepted, and the refund claim was made after such acceptance. On these facts, the timing of execution of the lease deed did not defeat entitlement to refund.

Conclusion: The refund was admissible and the issue is decided in favour of the assessee.

Final Conclusion: The order granting refund was upheld and the Revenue's challenge failed.

Ratio Decidendi: Where an SEZ unit's service tax payment relates to services used for authorized operations and the prescribed bond requirement is satisfied, refund under the relevant notification cannot be denied merely because the underlying lease agreement preceded acceptance of the bond.

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