SEZ Act, Rules, Notif. 9/2009-ST: Service tax refund cannot be denied for non-listed approved services

CESTAT allowed the appeal filed by the SEZ unit and set aside the impugned order denying refund of service tax for October-December 2010. It held that under the SEZ Act and Rules, developers and units are exempt from all taxes, and Notification No. 9/2009-ST is merely a procedural mechanism for implementing this substantive exemption. As Revenue did not dispute receipt and use of the services in authorized SEZ operations, refund could not be denied merely because the services were not included in the list of "approved services" by the SEZ authority. Any tax so collected was without authority of law and refundable.

---

---

Issues Involved:
1. Whether the impugned order has traveled beyond the show cause notice.
2. Whether the refund claim under Notification No. 9/2009-ST in respect of input services wholly consumed within the SEZ is admissible.
3. Whether the refund claim for services not mentioned in the application to SEZ Authority but included in the approved list is admissible.
4. Whether insurance auxiliary services can be treated as included under General Insurance Service for the purpose of refund claim.

Summary:

1. Whether the impugned order has traveled beyond the show cause notice:
The Tribunal observed that the allegations mentioned in the show cause notice (SCN) were not explicitly detailed. However, it held that the SCN had broadly show caused the appellant for the violation of Notification No. 9/2009-ST. Thus, the impugned order did not travel beyond the SCN as it covered the conditions of the notification.

2. Whether the refund claim under Notification No. 9/2009-ST in respect of input services wholly consumed within the SEZ is admissible:
The Tribunal agreed with the adjudicating authority that the refund claim for services wholly consumed within the SEZ should have been claimed under Section 11B of the Central Excise Act, 1944. The notification provided exemption by way of refund, which required first paying service tax and then seeking a refund. The Tribunal held that the insertion of clauses providing relief for wholly consumed services was substantive and mandatory, not merely procedural.

3. Whether the refund claim for services not mentioned in the application to SEZ Authority but included in the approved list is admissible:
The Tribunal upheld the adjudicating authority's view that the appellant did not apply for the inclusion of Scientific Technology Consultancy Services and Customs House Agent Services in their initial application. Since these services were included in the approved list only after the relevant period, the appellant was not entitled to claim a refund for the service tax paid on these services for the period prior to their inclusion.

4. Whether insurance auxiliary services can be treated as included under General Insurance Service for the purpose of refund claim:
The Tribunal found that the appellant had not provided evidence to substantiate their claim that the invoices pertained to "employee medical insurance" rather than "insurance auxiliary service." Since the insurance auxiliary service was not included in the approved list, the refund claim for this service was rightly rejected by the adjudicating authority.

Conclusion:
The Tribunal concluded that the denial of the refund claim based on the non-inclusion of services in the approved list by the SEZ authority was not justified. The SEZ Act provides for exemption from all taxes, and any levy and collection of taxes from SEZ units without authority in law contravenes Article 265 of the Constitution. The Tribunal allowed the appeal, setting aside the impugned order.

Appeal Outcome:
The appeal was allowed, and the impugned order was set aside.

---