SEZ service exemption cannot be denied for missing Form A-1 when substantive eligibility is otherwise established.

Exemption under Notification No. 17/2011-ST cannot be denied solely for non-furnishing of Form A-1 when the services were admittedly rendered to a recipient in a Special Economic Zone and consumed there. The absence of Form A-1 was treated as an involuntary procedural lapse because the recipient had closed its business, making procurement of the form impossible. Where substantive eligibility for SEZ-linked exemption is otherwise established, a procedural infraction in the notification is condonable. The demand was therefore unsustainable and was set aside in favour of the assessee.

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Issues: Whether exemption under Notification No. 17/2011-ST dated 01.03.2011 could be denied merely for non-furnishing of Form A-1 despite the services having been rendered to and consumed in a Special Economic Zone.

Analysis: The demand was founded only on the absence of Form A-1. The fact that the services were provided to a recipient situated in the SEZ and consumed within the SEZ was not in dispute. Non-furnishing of Form A-1 was found to be involuntary because the recipient had closed its business, making procurement of the form impossible. Procedural infraction of a notification was held to be condonable where substantive eligibility for the exemption was otherwise established.

Conclusion: Denial of the exemption was unsustainable and the demand was set aside in favour of the assessee.

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