2023 (10) TMI 596 - AT - Service Tax

SEZ subcontractor wins exemption ruling for services consumed within SEZ

The Tribunal ruled in favor of the appellant, a sub-contractor providing services in the SEZ to a specific entity, determining them eligible for exemption ... Exemption from GST - N/N. 04/2004-ST dated 31.03.2004 - sub-contractor of the main contractor M/s. Khurana Construction provided the service in the SEZ to Suzlon Infrastructure Ltd. Revenue has denied the exemption to the appellant on the ground that the appellant being sub- contractor provided the service not to the SEZ but to the main contractor i.e. M/s. Khurana Construction, therefore, they are liable to pay the service tax. HELD THAT:- Even though the service was provided by the appellant on the behest of the main contractor M/s. Khurana Construction but there is no dispute that the service was provided in relation to various operations of the SEZ and the services was undisputedly consumed in the SEZ therefore, the appellant has provided the service in SEZ. Accordingly, they are eligible for exemption Notification No. 04/2004-ST dated 31.03.2004. In view of the COMMISSIONER OF SERVICE TAX-I VERSUS FEDCO PAINTS AND CONTRACTS [2017 (5) TMI 338 - CESTAT MUMBAI], it is settled that the service of sub- contractor provided in SEZ shall be eligible for exemption under Notification No. 04/2004-ST and other identical notifications. The impugned order is not sustainable, hence, the same is set aside - Appeal is allowed. Issues involved:The issue involved in the present case is whether the appellant acted as a sub-contractor of the main contractor and provided services in the SEZ to a specific entity, making them eligible for exemption under Notification No. 04/2004-ST dated 31.03.2004.Details of the Judgment:Issue 1: Eligibility for exemption under Notification No. 04/2004-STThe appellant, acting as a sub-contractor, provided services in the SEZ to a specific entity. The Revenue denied exemption, arguing that the services were provided to the main contractor and not directly to the SEZ. However, it was established that the services were consumed within the SEZ, making the appellant eligible for exemption. Various judgments cited supported this conclusion, emphasizing that services rendered to SEZ units for consumption within the SEZ are exempt. The Tribunal found in favor of the appellant, setting aside the impugned order and allowing the appeal.Separate Judgment:In a separate judgment, it was affirmed that the sub-contractor's service in the SEZ was eligible for exemption under Notification No. 04/2004-ST and similar notifications. The judgment highlighted that the approval by the Deputy Commissioner or Board of Approvals sufficed for providing and consuming services in the SEZ, leading to the allowance of the appeal and setting aside of the demand and penalties.Conclusion:The Tribunal concluded that the appellant's service as a sub-contractor in the SEZ was indeed eligible for exemption under Notification No. 04/2004-ST. The impugned order was deemed unsustainable and set aside, with the appeal being allowed.