Exemption Granted: Tribunal Overrules Order, Citing SEZ Act Section 26(1)(e) for Service Tax Relief

The Tribunal ruled in favor of the appellant, setting aside the impugned order and granting the exemption under Notification No. 17/2011-ST. The Tribunal determined that the appellant was entitled to the exemption despite the initial non-submission of Form A1, as it was later submitted, ensuring compliance. The Tribunal also noted that Section 26 (1) (e) of the SEZ Act provides an overriding exemption from service tax for services provided to SEZ units. Consequently, the demand for service tax was deemed unsustainable. Judgment was pronounced on 11.10.2023.

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Issue whether exemption under Notification No. 17/2011-ST dated 01.03.2011 can be denied because Form A-1 was not available when services to an SEZ unit were provided but was submitted belatedly. No dispute services were rendered to an SEZ unit. The impugned denial was solely for non-submission of Form A-1; the form was subsequently produced, and therefore "compliance of the Notification No. 17/2011 stands made." Independently, Section 26(1)(e) of the SEZ Act "grants the exemption from payment of service tax in respect of the service provided to the SEZ units," and the SEZ Act overrides the Finance Act, 1994 under which Notification No.17/2011-ST was issued. Reliance on precedent was held to directly support the appellant. Conclusion: demand does not sustain; impugned order set aside and appeal allowed.

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