SEZ service tax refund on Rent-a-Cab service cannot be denied merely for not being an input service.

Under the SEZ refund notification, service tax refund on Rent-a-Cab service used for authorised operations could not be denied merely because the service was not treated as an input service. Where the tax had actually been paid, the service was approved for authorised SEZ operations, and no CENVAT credit had been taken, the refund conditions were satisfied. On that basis, rejection of the refund claim was unsustainable, and the assessee's claim was upheld with consequential relief.

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Issues: Whether refund of service tax paid on Rent-a-Cab service used for authorised operations in a Special Economic Zone could be denied on the ground that the service was not an input service.

Analysis: Notification No. 17/2011-S.T. grants exemption by way of refund for taxable services received for authorised operations in a SEZ, subject to the conditions that the tax has actually been paid, the service is approved for the authorised operations, and no CENVAT credit has been taken. The disputed service was used for the authorised operations in the SEZ unit and the tax paid on it was not shown to have been credit availed. In that situation, the refund claim could not be rejected merely because the service was treated as not falling within the category of input services.

Conclusion: The rejection of refund on Rent-a-Cab service was unsustainable and the issue was decided in favour of the assessee.

Final Conclusion: The impugned order was set aside and the assessee's refund claim was upheld with consequential relief according to law.

Ratio Decidendi: Under the SEZ refund notification, a service tax refund cannot be denied for a specified service used for authorised SEZ operations when the tax has been paid and no CENVAT credit has been taken, merely on the ground that the service is not otherwise treated as an input service.

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