SEZ exemption overrides refund-notification time limits, so service tax paid on authorised operations remains refundable.

Service tax paid on input services used for authorised operations in a Special Economic Zone was refundable because the Special Economic Zones Act, 2005 prevails over the Finance Act, 1994 and the refund notification. The notification's one-year filing limit could not defeat the substantive exemption where the levy itself was displaced for authorised SEZ operations. Amounts collected as service tax in that setting were treated as unsustainable, so rejection of the refund claim on limitation grounds was held untenable.

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Issues: Whether refund of service tax paid on input services used for authorized operations in a Special Economic Zone could be denied on the ground of limitation prescribed in the service tax exemption notification.

Analysis: The appellant was a co-developer in a Special Economic Zone and had paid service tax on input services used for authorized operations. The claim for refund was rejected only because it was filed beyond one year under the notification governing refund. The governing legal position, as applied in the order, is that the Special Economic Zones Act, 2005 grants exemption for such services and operates with overriding effect over the Finance Act, 1994 and the notifications issued thereunder. Once the levy itself is displaced for authorized SEZ operations, the procedural conditions and time-limit in the exemption notification cannot defeat the substantive entitlement to refund. Amounts paid as service tax in such circumstances are not sustainable collections and are refundable.

Conclusion: The appellant was held entitled to refund of service tax, and rejection on the ground of limitation was held unsustainable.

Ratio Decidendi: Where service tax is paid on services used for authorized SEZ operations, the exemption under the Special Economic Zones Act, 2005 prevails over conditions and limitation in service tax exemption notifications issued under the Finance Act, 1994.

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