SEZ refund eligibility turns on substantive use of services for authorised operations, not invoice bifurcation or partial outside-SEZ work.

Refund of service tax paid on services used for authorised SEZ operations was treated as admissible where the construction service was received and consumed wholly within the SEZ. Refund on CHA service could not be denied merely because the invoice split charges into salary and other expense heads, since the substance remained CHA service. Refund for trenching and pipeline construction was also allowed even though part of the pipeline lay outside the SEZ, because the work was undertaken for SEZ use and authorised operations. The rejection orders were set aside and consequential relief followed.

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Issues: (i) Whether refund of service tax paid on construction service received and consumed wholly within the SEZ was admissible; (ii) Whether refund on CHA service could be denied merely because the invoice bifurcated the service charges into salary and other expenses; (iii) Whether refund on trenching and pipeline construction partly outside the SEZ but used for SEZ operations was admissible.

Issue (i): Whether refund of service tax paid on construction service received and consumed wholly within the SEZ was admissible.

Analysis: The service was admitted to have been received and consumed within the SEZ. Once the service is used within the SEZ and is not taxable in that setting, the tax paid on it cannot be retained merely because the claim was examined with reference to Notification No. 09/2009-ST.

Conclusion: The refund was admissible in favour of the assessee.

Issue (ii): Whether refund on CHA service could be denied merely because the invoice bifurcated the service charges into salary and other expenses.

Analysis: The invoice contained different heads of expenditure, but the substance of the transaction remained CHA service. Merely splitting the service charge under various cost heads did not alter the character of the service rendered by the CHA.

Conclusion: The refund could not be rejected and was admissible in favour of the assessee.

Issue (iii): Whether refund on trenching and pipeline construction partly outside the SEZ but used for SEZ operations was admissible.

Analysis: The construction was for the SEZ and for its authorised operations. The fact that a part of the pipeline lay outside the SEZ premises did not change the purpose for which the service was received.

Conclusion: The refund was admissible in favour of the assessee.

Final Conclusion: The refund claims were held to be allowable and the impugned orders rejecting them were set aside, with consequential relief following.

Ratio Decidendi: Services received for authorised SEZ operations remain eligible for refund where the substantive use is within the SEZ, and the character of the service is not altered by invoice bifurcation or by the fact that part of the work lies outside the SEZ but is undertaken for SEZ use.

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