SEZ units granted service tax refund under SEZ Act, procedural lapses not a basis for rejection.

The Tribunal allowed the appeals, setting aside the rejection of refund claims under the SEZ Act. It held that SEZ units are exempt from service tax for services used in authorized operations, emphasizing the Act's overriding effect over other laws. Refunds were granted for services not on the default list but used for authorized operations, invoices were found to have been submitted, and time-barred claims were accepted within the specified limit. The decision reaffirmed the SEZ Act's intent to provide fiscal benefits to SEZ units, emphasizing that procedural lapses should not be a basis for rejection of refund claims.

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Issues Involved:
1. Eligibility for refund claims under the SEZ Act.
2. Rejection of refund claims due to services not covered in the default list.
3. Rejection due to non-submission of invoices.
4. Rejection on the grounds of time-barred claims.
5. Overriding effect of SEZ Act over other laws.

Issue-wise Detailed Analysis:

1. Eligibility for Refund Claims under the SEZ Act:
The appellant, a registered unit under the SEZ Act, 2005, engaged in ITSS and BAS, filed refund claims for services received for authorized operations under Notification No. 12/2013-ST. The Commissioner (Appeals) partly allowed these claims and remanded the matter for verification. The appellant argued that Section 26 of the SEZ Act exempts services provided to SEZ units from service tax, and Section 51 gives the SEZ Act an overriding effect over other laws. The Tribunal upheld this view, stating that SEZ units are exempt from service tax for services used in authorized operations, as supported by various Tribunal decisions.

2. Rejection of Refund Claims Due to Services Not Covered in the Default List:
The Commissioner (Appeals) rejected refunds for Business Support Service, Library Service, Real Estate Service, Technical Testing & Analysis Service, Professional Charges, and Storage and Warehouse Services, stating they were not in the default list. The appellant countered that these services were included in the approved list by the Development Commissioner. The Tribunal found this rejection factually incorrect, as the services were indeed covered in the approved list, and even if not specifically approved, they were used for authorized operations, making them eligible for refunds under Section 26 and Section 51 of the SEZ Act.

3. Rejection Due to Non-Submission of Invoices:
Refunds were also rejected due to the non-submission of invoices. The appellant contended that they had submitted the invoices to the Commissioner of Service Tax and provided evidence of service tax payment on a reverse charge basis. The Tribunal noted that the appellant had indeed submitted the invoices, and the rejection on this ground was not tenable. The Tribunal emphasized that procedural lapses, such as non-inclusion in the Development Commissioner’s list, should not ground for rejecting refund claims.

4. Rejection on the Grounds of Time-Barred Claims:
In appeal No. ST/20895/2019, the refund claim for import of services was rejected as time-barred. The appellant argued that the claim was filed within the one-year limit from the date of service tax payment. The Tribunal agreed, stating that the claim was within the limitation period as per Notification No. 12/2013-ST and was wrongly rejected on time-bar grounds.

5. Overriding Effect of SEZ Act Over Other Laws:
The appellant argued that the SEZ Act, under Section 51, has an overriding effect over other laws, making the approval from UAC non-mandatory. The Tribunal supported this, citing various decisions that the SEZ Act’s provisions supersede other laws. The Tribunal reiterated that the intention of the SEZ Act is to provide fiscal benefits to SEZ units, and procedural requirements should not hinder these benefits.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeals and remanding the matter to the original authority for verification of invoices. The Tribunal emphasized that SEZ units are entitled to refunds for services used in authorized operations under the SEZ Act, and procedural lapses should not be grounds for rejection. The decision aligns with the SEZ Act's intention to provide fiscal benefits to SEZ units, reaffirming the Act’s overriding effect over other laws.

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