SEZ service tax refund allowed where tax was paid on authorised operations and Section 11B conditions were satisfied.

Service tax paid on services used for authorised operations in an SEZ was held refundable where the tax had actually been discharged and the claim satisfied Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. The notification-based refund scheme under Notification No. 9/2009-ST, as amended, was treated as an operational method of exemption and not a bar to refund merely because the services were wholly consumed within the SEZ. The SEZ framework was read as giving priority to deemed export treatment and a liberal construction against export taxation, so rejection of the refund claims was not sustainable.

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Issues: Whether the appellant was entitled to refund of service tax paid on services used in relation to authorised operations in the SEZ under Notification No. 9/2009-ST, as amended, and alternatively under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994.

Analysis: The refund claims had been rejected on the premise that services wholly consumed within the SEZ attracted unconditional exemption and therefore no refund could be claimed. The Tribunal held that the notification scheme does not bar refund where service tax has in fact been discharged on services used in relation to authorised operations in the SEZ. The refund mechanism under the notification is only an operational method for exemption, and where tax has already been paid, refund cannot be denied if the claim satisfies Section 11B. The Tribunal also relied on the SEZ framework, noting that services provided to an SEZ unit are treated as deemed exports, the SEZ provisions prevail over other laws, and the policy against export taxation supports a liberal construction in favour of refund.

Conclusion: The appellant was entitled to refund of the service tax paid, and the rejection of the refund claims was not sustainable.

Ratio Decidendi: Where taxable services are provided in relation to authorised operations in an SEZ and service tax has been discharged, refund cannot be denied merely because the notification provides an exemption-based refund mechanism; the claim remains maintainable under Section 11B of the Central Excise Act, 1944, subject to its conditions.

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