Procedural Non Compliance should not defeat SEZ non levy or exemption claims; adjudicator must allow documents and rehear.

Appellant's entitlement to exemption under Notification 25/2012 ST for services relating to metro projects, flyovers, bridges and ports requires admission of project specific documentary evidence and fresh adjudication; the adjudicating authority must reconsider eligibility after permitting production of records and hearing the parties. Separately, where law provides for non levy of tax in respect of SEZ units, mere procedural non compliance prima facie cannot justify denial of exemption; the adjudicator is directed to reassess SEZ claims in light of the statutory non levy principle, allowing full opportunity to submit documents and submissions.

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Issues: (i) Whether the appellant's services relating to metro project, flyovers, bridge and port qualify for exemption under Notification No. 25/2012-ST (entry Nos.13 and 14); (ii) Whether services provided to SEZ units are liable to service tax solely due to procedural non-compliance with Notification No. 12/2013-ST dated 01.07.2013.

Issue (i): Whether the appellant have provided services related to metro project, flyovers, bridge and port, etc. and whether their claim for exemption under Notification 25/2012-ST (entry No. 13 and 14) is correct or otherwise.

Analysis: The Tribunal found that the adjudicating authority denied exemption on the ground of non-declaration of project-specific details. The appellant has now placed on record the documentary particulars and seeks an opportunity to produce them before the adjudicating authority. The Court did not decide the substantive eligibility on merits but concluded that the factual records and project-specific details are material to the determination under Notification No. 25/2012-ST and therefore require fresh consideration by the adjudicating authority after allowing the parties to be heard.

Conclusion: The issue is remitted to the adjudicating authority for fresh adjudication after taking the appellant's documentary details on record and following the principles of natural justice.

Issue (ii): Whether the services provided to SEZ units are liable to service tax merely because of procedural lapse in conditions of Notification No. 12/2013-ST dated 01.07.2013.

Analysis: The Tribunal, after noting relevant precedents cited by the appellant and the statutory position under Section 26 of the SEZ Act, observed prima facie that procedural non-compliance alone cannot result in denial of exemption where the statute provides for non-levy of service tax in respect of SEZ units. The Tribunal did not finally adjudicate the tax liability but directed that the adjudicating authority reconsider the claim in light of the statutory non-levy provision and the case law relied upon, allowing the parties an opportunity to present relevant documents and submissions.

Conclusion: Prima facie, procedural lapse alone is not a ground to deny exemption; the matter is to be reconsidered by the adjudicating authority in favour of full opportunity to the appellant to establish entitlement.

Final Conclusion: The impugned order is set aside and the matter is remitted to the adjudicating authority for fresh adjudication on both issues after permitting production of documents and following the principles of natural justice; no final fiscal determination is made by the Tribunal.

Ratio Decidendi: Where a statutory provision provides for non-levy of tax in an SEZ, procedural non-compliance alone is not sufficient to deny exemption and the adjudicating authority must reconsider claims in light of the statutory non-levy after affording opportunity to produce relevant documents.

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