SEZ refund eligibility for transmission-related services upheld where power supply supported authorised operations despite surplus DTA supply.

Refund of service tax under Notification No. 12/2013-ST is admissible where the underlying services are used for authorized SEZ operations. A transmission line used to carry electricity generated within the SEZ remained part of the authorized operation even though it extended beyond the SEZ area. The existence of DTA-related activity did not by itself defeat the claim, because mere supply of surplus power to the DTA under the SEZ Rules was not treated as a separate business outside the SEZ, especially where no separate DTA unit existed. Prior decisions in the assessee's own case were followed, and the refund was therefore not denied.

---

---

Issues: Whether refund of service tax under Notification No. 12/2013-ST could be denied on the ground that the services related to transmission lines and other common services were used in an SEZ unit that also had DTA-related activity, and whether such use took the services outside authorized operations.

Analysis: The refund claim was examined in the light of the SEZ framework and the notification governing refund of service tax on specified services received for authorized operations. The relevant test was whether the services were used for authorized SEZ operations and whether the existence of DTA-related activity, without a separate DTA unit, could by itself defeat the claim. It was found that the transmission line, though located beyond the SEZ, was used to transmit electricity generated in the SEZ and therefore served the authorized operation. The reasoning also accepted that mere supply of surplus power to DTA under the SEZ Rules did not amount to carrying on a separate business outside the SEZ, especially where no DTA unit existed. The prior decisions in the assessee's own case were followed, and the refund was held not to be deniable on these grounds.

Conclusion: The refund was held to be admissible, and the Revenue's objection to the refund claim was rejected.

---