SEZ service tax refund claims cannot be time-barred without considering extension, and quarter-based payment restrictions cannot be added.

Refund claims for service tax paid on services used for authorised SEZ operations could not be rejected as time-barred where the notification allowed extension of the filing period and the authority failed to consider the request for condonation with a speaking order. The tribunal also held that refund could not be denied on the basis that payment to the service provider was made beyond the relevant quarter, because the notification did not impose any such quarter-based restriction. The matter was remanded for fresh adjudication of the extension request and the refund entitlement issues, with earlier remand directions left undisturbed.

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Issues: (i) whether the rejection of refund claims of service tax paid on specified services used for authorised operations of the SEZ as time-barred was sustainable; (ii) whether the refund claims could be denied on the ground that certain payments were made beyond the relevant quarter.

Issue (i): whether the rejection of refund claims of service tax paid on specified services used for authorised operations of the SEZ as time-barred was sustainable.

Analysis: Paragraph 3(III)(e) of Notification No. 12/2013-ST permitted refund claims to be filed within one year from the end of the month of actual payment of service tax, or within such extended period as the Assistant Commissioner or Deputy Commissioner may permit. The order found that the authority did not consider the request for extension of time and did not pass a reasoned decision on the exercise of discretion. In such a situation, the failure to examine the request for extension and the absence of a speaking order rendered the time-bar rejection unsustainable.

Conclusion: The rejection of the refund claims on the ground of limitation was set aside and the matter was remanded for fresh consideration of the request for extension of time.

Issue (ii): whether the refund claims could be denied on the ground that certain payments were made beyond the relevant quarter.

Analysis: The relevant notification condition required payment of the invoice amount and service tax to the service provider, but did not impose a requirement that such payment must be made within the relevant quarter. The appellate order had already found that the alleged relevant-quarter restriction was not part of the notification and that this aspect required re-examination. That view was applied to the earlier periods as well.

Conclusion: The denial of refund on the ground of payment beyond the relevant quarter was not sustained and the matter was remanded on that issue also.

Final Conclusion: The appeals succeeded to the extent that the time-bar rejection was displaced and the refund entitlement issues were sent back for fresh adjudication, while any earlier remand directions already made were left undisturbed.

Ratio Decidendi: Where a refund notification confers power to extend the prescribed filing period, the authority must consider the request and pass a reasoned order, and a time-bar rejection without such consideration is unsustainable; a notification condition cannot be enlarged by adding a restriction not found in its text.

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