2021 (3) TMI 681 - AT - Service Tax

Appeal Partially Allowed: Refunds Granted for SEZ Operations; Tribunal Upholds Rejection Due to Timing of Amendments.

The Tribunal partially allowed the appeal, upholding the rejection of Rs. 9,841/- for SBC and KKC due to timing of amendments, while granting the refund ... Refund of service tax paid - specified services received by a unit located in a SEZ or the developer of SEZ and used for the authorized operations - service tax paid under Reverse charge mechanism - HELD THAT:- The foremost argument put forward by the Ld. Counsel is that appellant unit being a SEZ unit is exempted from payment of taxes / duties under Section 26 of the SEZ Act. The issue whether conditions imposed as per Notification issued under Section 93 of the Finance Act would prevail over Section 26 of SEZ Act so as to deny the exemption from tax was considered by the Hon’ble High Court in the case of GMR AEROSPACE ENGINEERING LIMITED AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT] where it was held that rejection of refund claim stating that refund is time-barred as well as the classification of services is different or that the services are not specified services cannot sustain and requires to be set aside. Rejection of amount of ₹ 9,841/- - Rejection of refund of SBC and KKC - HELD THAT:- On perusal of the records, it is seen that all these invoices are prior to 2016. The amendments introduced in Notification No.12/2013-ST so as to exempt SBC & KKC have come into effect only on 3.2.2016 and 1.6.2016 . For this reason, the authorities below have rightly rejected the refund claim with regard to SBC & KKC - Rejection of ₹ 9,841/- with regard to SBC and KKC respectively is therefore upheld. Appeal allowed in part. Issues Involved:1. Time-barred refund claims.2. Rejection of refund claims due to classification of services.3. Rejection of refund claims for Swatchh Bharat Cess (SBC) and Krishi Kalyan Cess (KKC).4. Rejection of refund claims for specified services.Detailed Analysis:1. Time-barred Refund Claims:The appellant argued that the refund claim of Rs. 3,75,561/- was denied as it was filed beyond the time limit prescribed in para 3 (III) (e) of Notification No.12/2013-ST. The appellant contended that the relevant date for computing the one-year period should be from the date of receipt of the invoice document distributed to the appellant's office, not from the date of payment of service tax by the Mumbai office. The appellant emphasized that without receiving the relevant document, they could not avail of the credit or claim the refund. The Tribunal agreed with the appellant, noting that a harmonious reading of Rule 7 and Rule 9 of CCR, 2014 is necessary and that the delay should have been condoned as the substantive conditions were satisfied.2. Rejection of Refund Claims Due to Classification of Services:The appellant contested the rejection of Rs. 8,469/- and Rs. 1,93,917/- for Event Management Service and Real Estate Consultancy Service, arguing that these services were used for authorized operations in the SEZ. The Tribunal referred to the case of GMR Aerospace Engineering Ltd., which established that the classification of services should not be a ground for denying the refund if the services are used for authorized operations. The Tribunal set aside the rejection on this ground, stating that the classification was used only for statistical or accounting purposes post-2012.3. Rejection of Refund Claims for Swatchh Bharat Cess (SBC) and Krishi Kalyan Cess (KKC):The appellant argued that since the service tax was exempted, the attached Cess should also be exempted. However, the Tribunal upheld the rejection of Rs. 9,841/- for SBC and KKC, noting that the amendments to exempt these Cess came into effect only on 3.2.2016 and 1.6.2016, respectively. As the invoices were prior to these dates, the rejection was deemed justified.4. Rejection of Refund Claims for Specified Services:The Tribunal addressed the rejection of Rs. 39,744/- and other amounts due to the services not being specified. The appellant argued that the services were used for authorized operations, and the rejection was without specific reasons. The Tribunal agreed with the appellant, citing the GMR Aerospace Engineering Ltd. case, which held that the SEZ Act's provisions override other enactments, and the exemption should not be denied based on the classification of services.Conclusion:The Tribunal partly allowed Appeal ST/40349/2019, upholding the rejection of Rs. 9,841/- for SBC and KKC, and allowed Appeal ST/40350/2019 entirely. The Tribunal emphasized that the SEZ Act's provisions should prevail, and the conditions in the notifications should not frustrate the grant of refund for services used in authorized operations.