Tribunal overturns tax demand for appellant's SEZ services due to procedural error

The tribunal ruled in favor of the appellant, holding that the denial of exemption and confirmation of the service tax demand due to non-furnishing of Form A-1 was incorrect. Despite the procedural lapse, the appellant had provided services in a Special Economic Zone as required, and the denial of substantial relief solely based on non-compliance was deemed unjust. Citing a Supreme Court precedent, the tribunal set aside the demand, allowing the appeal and granting any consequential benefits in accordance with the law.

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Issues involved:
Recovery of service tax under Notification No. 17/2011-ST for non-furnishing of Form A-1 for exemption claim.

Analysis:
The judgment pertains to a case where the Revenue sought to recover service tax from the assessee for not furnishing Form A-1 as required under Notification No. 17/2011-ST. The Revenue alleged that the assessee did not comply with the procedure for claiming exemption, leading to the denial of exemption and confirmation of the proposed demand. The assessee appealed the decision before the forum.

During the hearing, both parties presented their arguments, and the tribunal considered the contentions, documents, and judgments referred to during the proceedings. The main issue revolved around whether substantial relief could be denied for non-compliance with a procedural requirement. It was established that the appellant provided services to a recipient in a Special Economic Zone (SEZ), where the services were consumed. The appellant's inability to obtain Form A1 due to the closure of the recipient's business was beyond their control.

The tribunal referenced a Supreme Court case to highlight that procedural lapses should not hinder the extension of substantial benefits if the party is otherwise eligible. In this case, the appellant had indeed provided the services consumed in the SEZ, and the denial of exemption was solely due to non-compliance with a procedural requirement, which was deemed incorrect based on the Supreme Court's decision.

Consequently, the tribunal concluded that the demand for service tax could not be sustained. Therefore, the impugned order and demand were set aside, and the appeal was allowed with any consequential benefits as per the law. The judgment was pronounced in open court on 23.01.2019.

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