SEZ refund limitation under general service tax notifications cannot override the special exemption regime for authorised operations.

The SEZ exemption regime under Section 26 of the Special Economic Zones Act, 2005, read with Rule 22 of the SEZ Rules, governs refund eligibility for service tax paid on input services used for authorised operations, and Section 51 gives that regime overriding effect. General exemption notifications issued under the Finance Act, 1994 cannot impose additional restrictive conditions inconsistent with the SEZ framework. Accordingly, the one-year limitation in Notifications No. 40/2012-ST and 12/2013-ST does not control SEZ refund claims, and rejection of such a claim solely on limitation is unsustainable.

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Issues: Whether the one-year limitation prescribed in Notification No. 40/2012-ST dated 20.06.2012 and Notification No. 12/2013-ST dated 01.07.2013 governs refund claims filed by an SEZ unit for service tax paid on input services used for authorized operations, and whether rejection of the refund claim solely on limitation was sustainable.

Analysis: The refund claims arose from services received by an SEZ unit for authorized operations. The governing scheme under Section 26 of the Special Economic Zones Act, 2005 grants exemption to SEZ developers and units, while Section 26(2) read with Rule 22 of the Special Economic Zones Rules, 2006 prescribes the manner and conditions for grant of such exemption. Section 51 of the Special Economic Zones Act, 2005 gives the Act overriding effect over inconsistent provisions of other laws. The notifications issued under Section 93 of the Finance Act, 1994 are general exemption notifications and cannot restrict the special exemption flowing from the SEZ statute and rules. The time limit contained in the notifications is therefore a condition under the general service tax regime and not a controlling restriction for SEZ refund eligibility.

Conclusion: The limitation period in the notifications does not apply to the SEZ refund claims, and rejection of the refund claim solely on that ground was unsustainable.

Ratio Decidendi: Where the Special Economic Zones Act, 2005 grants exemption for authorized operations and the SEZ Rules prescribe the governing conditions, a service tax exemption notification issued under the Finance Act, 1994 cannot impose additional restrictive conditions, including limitation, inconsistent with the SEZ regime.

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