SEZ service tax exemption prevails for authorised operations when no evidence shows non-authorised use.

Services supplied to an SEZ unit for authorised operations are exempt from service tax under the Special Economic Zones Act, 2005, and the Act prevails over any inconsistent fiscal law. Air travel agent services used for employee travel bookings were held to fall within this protection, as no evidence showed personal use or any non-authorised purpose. The commentary also notes that the limitation plea supported the assessee's position. On that basis, the service tax demand was unsustainable, and the impugned order was set aside with consequential relief.

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Issues: Whether service tax demand on air travel agent services provided to SEZ units for authorised operations was sustainable in view of the SEZ Act overriding effect and absence of evidence of non-authorised use.

Analysis: Section 26(1) of the Special Economic Zones Act, 2005 grants exemption from service tax on services provided to a Developer or Unit for authorised operations in a Special Economic Zone, and Section 51(1) gives the Act overriding effect over any inconsistent law. The services were provided to SEZ units for travel bookings of employees, and no evidence was produced to show that the services were used for personal purposes or outside authorised operations. The demand was therefore not supportable on merits, and the plea of limitation also supported the assessee's case.

Conclusion: The demand of service tax was unsustainable and the issue was decided in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief according to law.

Ratio Decidendi: Services supplied to an SEZ unit for authorised operations are exempt under the SEZ Act, and that special enactment prevails over inconsistent provisions of other fiscal laws.

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