SEZ service tax refund remains available where surplus power reaches the Domestic Tariff Area without defeating authorised SEZ operations.

SEZ developers engaged in power generation were entitled to service tax refund under Notification No. 17/2011-ST and Notification No. 09/2009-ST because the services were used for authorised SEZ operations, and mere supply of surplus electricity to the Domestic Tariff Area did not by itself show a separate DTA business or defeat refund eligibility. The Tribunal also accepted that the Commissioner (Appeals) had power to remand the refund matter under the Finance Act, 1994 and the governing Gujarat High Court precedent. On both the substantive refund issue and the procedural objection, the Revenue's challenge failed and the relief to the assessee was maintained.

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Issues: (i) Whether SEZ developers engaged in power generation were entitled to refund of service tax under Notification No. 17/2011-ST and Notification No. 09/2009-ST despite surplus electricity being supplied to the Domestic Tariff Area under the SEZ regime; (ii) Whether the Commissioner (Appeals) had power to remand the refund matter to the adjudicating authority.

Issue (i): Whether SEZ developers engaged in power generation were entitled to refund of service tax under Notification No. 17/2011-ST and Notification No. 09/2009-ST despite surplus electricity being supplied to the Domestic Tariff Area under the SEZ regime.

Analysis: The refund claim was examined in the light of the SEZ notifications, the SEZ Act, 2005, and Rule 47 of the SEZ Rules, 2006. The services were received for authorized operations in the SEZ, and the mere transfer of surplus power to the Domestic Tariff Area did not establish that the assessee carried on a separate DTA business or that the services were not used for authorized SEZ operations. The issue was already covered by the Tribunal's earlier decision on identical facts, which held that such DTA supply of surplus power did not defeat entitlement to refund.

Conclusion: The refund was allowable and the Revenue's challenge on this issue failed.

Issue (ii): Whether the Commissioner (Appeals) had power to remand the refund matter to the adjudicating authority.

Analysis: The question was governed by the statutory scheme under the Finance Act, 1994 and the binding Gujarat High Court ruling relied upon in the order. The remand power of the Commissioner (Appeals) was held to be available in service tax matters, and the contrary objection raised by Revenue was rejected.

Conclusion: The Commissioner (Appeals) had power to remand, so the Revenue's objection was unsustainable.

Final Conclusion: The appeals could not succeed on either merits or procedural objections, and the impugned relief in favour of the assessee was maintained.

Ratio Decidendi: In SEZ service tax refund matters, supply of surplus power to the Domestic Tariff Area under the SEZ framework does not by itself negate use of services for authorized operations in the SEZ, and the Commissioner (Appeals) can remand the matter where the statute and governing precedent so permit.

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