2026 (3) TMI 1373 - AT - Service Tax

SEZ service tax refund allowed where specified services were used for authorised operations despite mismatch in approval nomenclature.

Refund under Notification No. 12/2013-ST is available for services received by an SEZ unit and used for authorised operations where the services are ... Refund claims seeking refund of service tax paid on the specified services used for authorized operations in the Special Economic Zone (SEZ) - Benefit of Notification No. 12/2013-ST - rejected on the ground that the Group Medical Insurance and Personal Accident Insurance of employees and their family dependents are not included in the list of input services approved by Unit approval Committee (UAC) of the Development Commissioner Specified services - Authorised operations - General insurance services - HELD THAT: - The Tribunal held that under Notification No. 12/2013-ST, the relevant test for refund is whether the service is a specified service approved for the SEZ unit and used for authorised operations, with service tax having been discharged thereon. It found no dispute that General Insurance Services were specified by the Development Commissioner and were used in authorised operations. On that basis, rejection of refund on the ground that group medical insurance and personal accident insurance did not separately qualify within the approved description was held to be irrelevant, particularly when the insurance pertained to the employees of the appellant. The Tribunal further held that reference to the Cenvat Credit Rules for testing admissibility of such refund was misplaced, since the notification grants refund on specified services used for authorised operations and is not conditioned by the input service test under those rules. [Paras 4, 5, 6] The impugned rejection of the refund claims was held unsustainable and the refund was allowed with consequential relief. Final Conclusion: The Tribunal held that the refund claims of the SEZ unit could not be rejected merely because the insurance services were described as group medical insurance and personal accident insurance, once general insurance services were approved, tax was paid, and the services were used for authorised operations. The impugned order was set aside and the appeals were allowed with consequential relief. Issues: Whether refund of service tax under Notification No. 12/2013-ST is admissible for services used in authorised operations in an SEZ when the services are specified by the Development Commissioner but are alleged not to fall within the exact description approved by the Unit Approval Committee.Analysis: The notification grants exemption by way of refund for services received by an SEZ unit and used for authorised operations, and its scheme requires approval of the list of specified services for which exemption or refund is claimed. The decisive factors are that the services must be specified, tax must have been paid, and the services must have been used in authorised operations. Once those requirements are met, rejection cannot rest on the narrow ground that the insurance services claimed as refund are not described in the approval list in the same manner, especially when the services were in fact used for the authorised operations and service tax was discharged on them. Reliance on Cenvat Credit Rules to deny such refund was held to be misplaced because the refund claim was governed by the notification's own conditions.Conclusion: The refund could not be rejected on the ground that the employee insurance services did not exactly fit the description of general insurance in the approval list, and the assessee was entitled to refund.Final Conclusion: The impugned rejection of refund was set aside and the appeals succeeded with consequential relief.Ratio Decidendi: Under Notification No. 12/2013-ST, refund is admissible for specified services used in authorised operations in an SEZ if service tax has been paid, and mere mismatch with the descriptive nomenclature in the approval list is not a valid ground to deny the refund.