SEZ refund for service tax on approved authorised operations cannot be denied by rechecking nexus independently.

Refund of service tax on services used for authorised operations in a Special Economic Zone is admissible where the SEZ Approval Committee has certified those services as required for the unit's operations. Notification No. 09/2009-ST exempts taxable services received by an SEZ developer or unit in relation to authorised operations, and the revenue cannot reject refund by independently reappraising nexus once the competent committee has approved the services. Services used for business activities incidental to manufacture and export in the SEZ were covered, so a narrow view that only manufacture qualified was unsustainable. The refund denial was accordingly set aside in favour of the assessee.

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Issues: Whether refund of service tax paid on services used in relation to the authorised operations of a SEZ unit was admissible, and whether the lower authorities were justified in denying refund on the ground that the services were not connected with manufacture alone.

Analysis: Notification No. 09/2009-ST exempted taxable services provided in relation to authorised operations in a Special Economic Zone and received by a developer or unit of the SEZ, subject to the stated conditions. The Approval Committee had specified the services required for the appellant's authorised operations and had approved the relevant services. The revenue authorities could not disregard that approval or re-examine the nexus once the competent committee had certified the services as related to authorised operations. The services were used for the business activities incidental to manufacture and export in the SEZ, and the refusal of refund on the premise that only manufacture was the authorised operation was unsustainable. The statutory scheme under the SEZ Act and Rules, read with the refund/exemption notifications, supported the claim.

Conclusion: The refund claim was held admissible and the denial by the lower authorities was set aside in favour of the assessee.

Final Conclusion: The appeals succeeded and the impugned orders rejecting refund were annulled, with consequential relief as per law.

Ratio Decidendi: Where the competent SEZ Approval Committee has certified services as connected with authorised operations, the revenue cannot deny refund of service tax on an independent reappraisal of nexus contrary to that approval.

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