2025 (12) TMI 97 - AT - Service Tax

SEZ unit entitled to Cenvat refund on rent-a-cab; approval timing irrelevant once service specified for exemption

CESTAT set aside the impugned order and allowed the appeal filed by the SEZ unit, holding that refund of Cenvat credit on rent-a-cab services was ... Refund of Cenvat Credit on the rent a cab services - rejection on the ground that rent a cab service was excluded from the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004 w.e.f. 01.04.2011 and was included in the list of specified services for SEZ only w.e.f. 19.11.2013 vide Instruction No. 79 dated 19.11.2013 - HELD THAT:- Notification dated 01.07.2013 does not mention anywhere that the services provided to a developer or a unit in SEZ should be approved by the Approval Committee at the time of receipt of services. It is also found that the refunds were filed by the Appellant on 09.06.2014 and 22.08.2014 and at that time, ‘rent a cab service’ was included in the list of specified services, on the issue that from which date the services are to be considered for grant of refund, it has been held that it is the date when the refund claim is filed and not the date when the services were received. Besides this, it is also found that as per the SEZ Act, there is a complete exemption for the services provided to a developer or a unit and there is no condition prescribed under any notifications/circulars of Service Tax Regime that rules or regulations of Service Tax will hamper the Appellant to claim the refund as held in the cases of GMR Aerospace Engineering Ltd [2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT] and DLF Assets Pvt Ltd [2020 (11) TMI 35 - CESTAT NEW DELHI]. The denial of refund solely on the basis that the services were not approved by the Approval Committee during the relevant period, is not sustainable in law. The impugned order is set aside - appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether refund of Cenvat Credit of service tax paid on 'rent a cab service' used by a SEZ unit can be denied on the ground that the said service was not included in the list of specified/approved services at the time of receipt of service, but was included only later by Instruction No. 79 dated 19.11.2013. 1.2 For determining eligibility to refund under the Notification dated 01.07.2013, whether the relevant date is the date of receipt of input service or the date of filing of the refund claim. 1.3 Whether conditions and limitations contained in the Notification dated 01.07.2013 or in the Service Tax regime can restrict or override the statutory exemption/refund benefits available to SEZ units under the SEZ Act, 2005 and SEZ Rules, 2006, including in relation to 'rent a cab service'. 1.4 Whether Instruction No. 79 dated 19.11.2013, including 'rent a cab service' in the list of default/specified services for SEZ units, is to be treated as clarificatory and retrospective in effect. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Denial of refund for want of prior approval / inclusion at time of receipt of service Legal framework (as discussed) 2.1 The Tribunal considered Notification No. 12/2013 dated 01.07.2013 granting exemption by way of refund of service tax paid on specified services received by SEZ units for authorized operations, and Instruction No. 79 dated 19.11.2013 whereby 'rent a cab service' was included in the list of specified/default services for SEZ. Interpretation and reasoning 2.2 The Court found that Notification dated 01.07.2013 does not stipulate that services must be approved by the Approval Committee at the time of receipt of the services for entitlement to refund. 2.3 Refund claims for the periods July 2013-September 2013 and October 2013-September 2014 were filed on 09.06.2014 and 22.08.2014 respectively, by which dates 'rent a cab service' already stood included in the list of specified services pursuant to Instruction No. 79. 2.4 Relying on the decisions cited, the Court accepted the principle that for determining eligibility to refund under the SEZ refund notification, the relevant consideration is the legal position as on the date of filing of the refund claim, not the date of receipt of the service. 2.5 The Court thus held that mere non-inclusion or non-approval of 'rent a cab service' at the time of receipt of service cannot be a valid ground to deny refund when, at the time of filing the refund claims, the service was a specified service. Conclusions 2.6 Denial of refund of Cenvat Credit on 'rent a cab service' solely because the service was not approved/included at the time of receipt of service is unsustainable in law. Issue 2: Relevant date for determining eligibility - date of service vs. date of refund claim Interpretation and reasoning 2.7 The Court noted that the decisions relied upon by the appellant have held that for deciding from which date services are to be considered for grant of refund under the SEZ refund notification, the determinative date is the date on which the refund claim is filed, and not the date when the input services were received. 2.8 Applying this principle, since 'rent a cab service' was included in the list of specified services before the dates on which the appellant filed its refund claims, the appellant's claims were in consonance with Notification dated 01.07.2013. Conclusions 2.9 For purposes of grant of refund under the Notification dated 01.07.2013, the relevant time to examine whether a service is a specified service is the date of filing of the refund claim, not the date of receipt of the service. Issue 3: Overriding effect of SEZ Act and SEZ Rules vis-à-vis Service Tax notifications/conditions Legal framework (as discussed) 2.10 The Court referred to Section 26(1)(e) of the SEZ Act, 2005, granting exemption from service tax on taxable services provided to a developer or a unit for carrying on authorized operations in an SEZ, and Rule 31 of the SEZ Rules, 2006, which prescribes such exemption for authorized operations. 2.11 The Court took note of the principle, as settled in cited decisions, that the SEZ Act and SEZ Rules have an overriding effect over other laws by virtue of Section 51 of the SEZ Act. Interpretation and reasoning 2.12 The Court found that under the SEZ Act there is a complete exemption for services provided to a developer or unit in SEZ for authorized operations, and no condition in notifications/circulars issued under the Service Tax regime can operate to deny or dilute this statutory benefit. 2.13 It was held that any conditions in Notification dated 01.07.2013 cannot restrict the appellant from claiming refund of service tax paid on 'rent a cab service', since services provided to SEZ units for authorized operations are exempt under the SEZ Act and SEZ Rules. Conclusions 2.14 The statutory exemption and refund entitlements under the SEZ Act and SEZ Rules override any restrictive conditions in the Service Tax notifications; such conditions cannot be invoked to deny refund of service tax in respect of 'rent a cab service' used for authorized operations by an SEZ unit. Issue 4: Nature and temporal operation of Instruction No. 79 - clarificatory and retrospective effect Interpretation and reasoning 2.15 The Court observed, with reference to the decisions cited, that clarifications/instructions issued by the Ministry are generally treated as clarificatory in nature and hence have retrospective effect. 2.16 Instruction No. 79, which included 'rent a cab service' in the list of default/specified services for SEZ units, was considered by the Court as such a clarificatory instruction intended to streamline the process of approval of services for authorized operations. 2.17 The Court accepted the contention that 'rent a cab service' had always been part of the default list for SEZ operations and that its specific inclusion through Instruction No. 79 was merely clarificatory and could not be used as a basis to refuse refund for earlier periods, once refund claims were filed after such inclusion. Conclusions 2.18 Instruction No. 79 is clarificatory and has retrospective effect; its issuance cannot be used to restrict or postpone the appellant's entitlement to refund of service tax on 'rent a cab service' where refund claims were filed after its issuance. Overall conclusion 2.19 The Court held that rejection of refund of Cenvat Credit on 'rent a cab service' for the SEZ unit, on the ground that the services were not approved by the Approval Committee during the relevant period and were included as specified services only subsequently, is legally unsustainable. The impugned order was set aside and the appeal was allowed with consequential relief as per law.