2025 (9) TMI 331 - AT - Service Tax

Refund of service tax on inputs used for SEZ manufacturing allowed under N/N. 09/2009-ST; consistent precedents applied

M/s. Dell India Pvt. Ltd. Versus Commissioner of Central Excise and Service Tax (Appeals), LTU - Bangalore

M/s. Dell India Pvt. Ltd. Versus Commissioner of Central Excise and Service Tax (Appeals), LTU - Bangalore - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether service tax paid on taxable services consumed in authorised operations of an SEZ unit is refundable when the unit files refund claims under the relevant notification permitting refund of service tax on inputs used in SEZ operations. 2. Whether an amending notification providing exemption ab initio for taxable services consumed in SEZ operations precludes a separate refund claim for service tax already paid. 3. Whether there must be an independent nexus inquiry between approved list of services (by the Unit Approval Committee) and the authorised operations of the SEZ unit for allowing refund of service tax. 4. Whether prior consistent tribunal decisions addressing identical facts and legal questions are binding for disposal of subsequent refund claims by the same assessees (application of precedent/res judicata principles). ISSUE-WISE DETAILED ANALYSIS Issue 1 - Refundability of service tax paid on taxable services consumed in authorised SEZ operations Legal framework: The statutory/regulatory scheme permits refund of service tax paid on inputs/services used in authorised operations of SEZ units under the relevant notification governing refunds for SEZ operations. Precedent treatment: The Tribunal has previously decided in favour of allowing refunds where identical conditions were satisfied, applying established principles concerning refund claims by SEZ units. Interpretation and reasoning: The Tribunal examined the refund claims filed by the appellant for service tax paid on various taxable services consumed wholly in authorised SEZ operations. Given that the services were consumed in the course of authorised activities and the claims were filed under the notification allowing refunds, the Tribunal held that refund entitlement arises under the statutory/regulatory scheme. The Court relied on consistent prior decisions dealing with the same issue and fact pattern, finding no distinction to justify denial. Ratio vs. Obiter: Ratio - where service tax is paid on services wholly consumed in authorised SEZ operations and refund claims are filed under the notification, refund is allowable. Conclusion: Refunds of the service tax paid on input services consumed in authorised SEZ operations are allowable and the impugned orders rejecting such refunds were set aside. Issue 2 - Effect of subsequent/amending notification granting ab initio exemption on refund claims Legal framework: An amending notification later provided unconditional exemption ab initio for specified taxable services when fully consumed in SEZ authorised operations. Precedent treatment: The Tribunal considered earlier decisions which addressed whether such an amending exemption negates previously filed refund claims for periods prior to or overlapping the effective operation of the exemption. Interpretation and reasoning: The Tribunal reasoned that the existence of an amending notification granting exemption ab initio does not retrospectively invalidate or preclude refund claims legitimately filed for service tax paid where the statutory/regulatory mechanism for refund was available and claims were made in accordance with that mechanism. The Court relied on prior Tribunal conclusions that the amendment did not operate to defeat refund claims already maintainable under the refund notification; thus, denial of refund solely on the ground of subsequent or concurrent exemption was not justified. Ratio vs. Obiter: Ratio - an amending notification granting exemption ab initio for services consumed in SEZ operations does not automatically bar refund claims properly filed under the refund regime; refund entitlement must be considered on statutory terms. Conclusion: Rejection of refund claims on the sole basis that an unconditional exemption exists in an amending notification was not sustained. Issue 3 - Nexus between approved services and authorised operations where Unit Approval Committee has approved lists of services Legal framework: SEZ regime contemplates approval by a Unit Approval Committee of services required for authorised operations; refund claims require that input services be used for authorised operations. Precedent treatment: Tribunal precedent has treated approval by the competent SEZ authority as determinative for purposes of establishing the nexus between input services and authorised operations, subject to the approval being bona fide. Interpretation and reasoning: The Tribunal observed that the Unit Approval Committee had approved lists of services required for authorised operations of the unit. Once the competent SEZ authority has approved the services as required for authorised operations, the Tribunal held that the requirement of nexus between input services and authorised operations cannot be reopened in appeal merely by the revenue contesting the connection. The Court followed earlier pronouncements treating the approval as sufficient evidence of nexus, thereby justifying refund entitlement for services consumed as per the approved list. Ratio vs. Obiter: Ratio - approval of the list of taxable services by the Unit Approval Committee constitutes adequate nexus between input services and authorised SEZ operations for the purpose of refund claims; absent specific contrary material, re-examination of nexus is not warranted. Conclusion: The Tribunal rejected the denial of refund on the ground of lack of nexus where the Unit Approval Committee had approved the services used by the SEZ unit. Issue 4 - Application of prior tribunal decisions and consistency of view (precedential value) Legal framework: Principles of administrative/tribunal adjudication encourage followance of consistent prior decisions on identical or substantially similar questions of law and fact, barring distinguishing features. Precedent treatment: The Tribunal relied on its own consistent earlier orders on identical factual and legal questions involving refund claims by the same assessee under the same notification(s). Those prior orders applied controlling principles and were followed in later decisions. Interpretation and reasoning: The Tribunal found the present appeals to raise issues already conclusively addressed in its prior orders involving the same legal questions and similar facts. In the absence of any distinguishing circumstances, the Tribunal applied its prior consistent view and followed the earlier reasoning, treating it as binding for the appeals before it. The Tribunal also referred to an authoritative principle previously used in its own reasoning to uphold refund claims and applied that principle here. Ratio vs. Obiter: Ratio - where a tribunal has consistently decided identical legal questions in prior orders involving the same assessee and indistinguishable facts, subsequent identical appeals should follow that consistent view unless materially distinguishable or overruled by a superior forum. Conclusion: The Tribunal applied its consistent prior decisions and allowed the appeals, setting aside the impugned orders and directing consequential relief as per law.