Service Provider in SEZ Granted Service Tax Exemption; Tribunal Sets Aside Commissioner's Order Based on SEZ Act Provisions

The Tribunal ruled in favor of the appellant, a service provider in SEZ premises, granting them exemption from service tax. The Tribunal set aside the Commissioner's order that demanded service tax due to non-compliance with notification conditions. It relied on precedents and legal provisions, particularly the SEZ Act, which supports the exemption for services provided to SEZ Developers/Units. Consequently, the appellant was entitled to the exemption and any consequential benefits as per the law.

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Issues involved:
The issue involved in this appeal is whether the exemption from payment of service tax for services provided in SEZ units can be denied based on the non-fulfillment of prescribed conditions under the service tax notification.

Comprehensive Details:

Issue 1: Compliance with Exemption Notification
The appellant, a service provider in SEZ premises, claimed exemption from service tax under specific notifications. The Show Cause Notice proposed disallowing the exemption claim for export services, leading to a demand for service tax. The Commissioner confirmed the demand, citing non-compliance with the conditions of the exemption notification.

Issue 2: Legal Arguments
The appellant argued that non-compliance with procedures should not negate the exemption benefit. They relied on SEZ Act provisions exempting taxable services provided to SEZ Developers/Units for authorized operations. The appellant cited the overriding effect of the SEZ Act over other laws.

Issue 3: Precedent and Judicial Interpretation
The appellant referenced a High Court judgment where exemption on services to SEZ Developers was allowed despite non-filing of prescribed forms. The Supreme Court dismissed the Revenue's appeal against this judgment. The appellant also highlighted that compliance with Form A1/A2 was available for part of the disputed period.

Conclusion
The Tribunal found in favor of the appellant, citing precedents and legal provisions. It held that the appellant, having provided services in SEZ premises, was entitled to exemption. The impugned order was set aside, granting the appellant consequential benefits as per the law.

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