TaxTMI 
TaxTMI 
2015 (11) TMI 1048
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....mic Zone, they are not liable to be charged with duties or taxes under section 26 of Special Economics Zone Act, 2005 and, having been charged for the same, they were entitled to refund of Rs. 12,32,233/- borne by them. 2. The impugned order held that taxes are exempt to the extent that they are consumed within a Special Economic Zone but that the said tax had been discharged on services related to Initial Public Offering (IPO) which was billed to the corporate office of the appellant at Mumbai and not to its Zone under implementation at Jamnagar. It was found by the first appellate authority that raising finance from outside sources did not constitute authorized operations. 3. Learned Counsel for appellant referred to decisions of the Tribunal in Norasia Container Line v Commissioner of Central Excise, New Delhi [2011 (923) STR 295 (Tri-Del)], Reliance Ports & Terminal Ltd v Commissioner of Central Excise & Service Tax Rajkot [2013-TIOL-1473-CESTAT-AHM], IntasPharma Ltd v Commissioner of Service Tax Ahmedabad [2013-TIOL-1091-CESTAT-AHM] and Tata Consultancy Services Ltd v Commissioner of Central Excise & Service Tax, Mumbai [2012-TIOL-1034-CESTAT-MUM]. Learned Authorized Rep....
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....Letter of Approval (LoA) issued by the Development Commissioner to manufacture permitted goods or render permitted services for being Net Foreign Exchange Positive. Permission for procurement of goods and services required for authorized operations of the developer/co-developer are accorded by the Approval Committee chaired by the Development Commissioner and in which the Commissioner of Central Excise & Customs is a member. The services permitted for use in authorized operations of the unit are also approved by the Approval Committee. Such goods and services are entitled to exemption from duties or taxes. 3.4 The comprehensive Special Economic Zones Act provides for exemption of duties and taxes besides according overriding effect when in conflict with other laws and for deeming the Zone to be outside the Customs territory in relation to authorized operations. The relevant provisions of the Special Economic Zones Act, 2005 are as below: 26. (1) Subject to the provisions of sub-section (2), every Developer and the entrepreneur shall be entitled to the following exemptions, drawbacks and concessions, namely:- (a) exemption from any duty of customs, under the Cus....
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....f section 93 of the Finance Act, 1994 (32 of 1994), and in supersession of the notification of the Government of India, Ministry of Finance (Department of Revenue), No. 4/2004-ServiceTax, dated the 31st March, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated the 31st March, 2004, vide, G.S.R.248(E), dated the 31st March, 2004, except as respects things done or omitted to be done before such supersession, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services specified in clause (105) of section 65 of the said Finance Act, which are provided in relation to the authorised operations in a Special Economic Zone, and received by a developer or units of a Special Economic Zone, whether or not the said taxable services are provided inside the Special Economic Zone, from the whole of the service tax leviable thereon under section 66 of the said Finance Act: Provided that- (a) the developer or units of Special Economic Zone shall get the list of services specified in clause (105) of section 65 of the said Finance Act as are required in relation to ....
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....r such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit, from the date of actual payment of service tax by such developer or unit to service provider; 3. The exemption contained in this notification shall apply only in respect of service tax paid on the specified services on or after the date of publication of this notification in the Official Gazette. 3.6 Certain changes to allow the service providers to be relieved of the responsibility to collect and deposit the tax was incorporated by amending notification No. 15/2009-ST dated 20 th May 2009. In the said notification, (i.e. Notification No. 9/2002-ST). A) in paragraph 1, in the proviso,- the sub-paragraph (c), the following shall be substituted, namely:- "(c) the exemption claimed by the developer or units of Special Economic Zone shall be provided by way of refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone except for services consumed wholly within the Special Economic Zone;" (2) for sub-paragraph (d), the following shall be ....
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....xemption is available only to service tax paid after the notification has come into force (paragraph 3 of notification 9/2009-ST dated 3 rd March 2009) and (b) that the applicant had not sought refund within six months of payment of tax (condition (f) in paragraph 2 of notification 9/2009-ST dated 3 rd March 2009) the objective of such an unambiguous procedure is amply clear. 3.9 Admittedly, the notification 9/2009-ST was not in existence and, hence, not the basis of the claim preferred by the appellant before the jurisdictional Central Excise officer. At the same time, it is, undoubtedly, the operational procedure put in place for implementing the provision in the Special Economic Zones Act, 2005 granting exemption of service tax for authorized operations. It is also the first such enabling procedure after the Special Economic Zones Act, 2005 was brought into force on 10 th February 2006. 3.10 The two notifications, in conjunction, have given effect to the statutory promise by devising two methods for availing the exemption - by upfront exemption when the service is rendered within the geographical boundaries of the Special Economic Zone and by the refund route where the phy....
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....actment. 3.13 From the notifications of 2009 issued by Department of Revenue, it is clear that the test of utilization of service for authorized operations is left to the wisdom of the Approval Committee and the satisfaction of the jurisdictional Assistant Commissioner regarding its actual utilization. This is in conformity with the scheme envisaged by the Special Economic Zones Act, 2005. The approval of the Approval Committee is not in question in the instant case. However, the original authority could not find a link between the service rendered by M/s NSDL and the operations of the appellant as developer/unit in the Zone. The two lower authorities have erred in arriving at this conclusion. The undertaking in the Zone was the sole investment of the appellant and hence any service provided to the appellant cannot but be in relation to its authorized operations. 3.14 In re Norasia Containers Lines, the Tribunal considered the appeal filed against a demand for tax that had not been included in the invoice raised for supply of taxable services while providing containers to unit in a Special Economic Zone which the jurisdictional Central Excise authority felt was not consumed w....
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....hed goods out of SEZ for export purposes. Therefore, we are of the view that the impugned services relating to supply of containers in the SEZ are exempt from payment of service tax. We, accordingly, set aside the impugned order and allow the appeals. The Stay applications also stand disposed of." 3.15 Later decisions of the Tribunal on dispute that arose, notwithstanding the notification of the elaborate procedures of 2009 and in the face of the rigid attitude of the refund sanctioning authorities, concerned as they were with the temptation to deny eligible exemptions, expounded on the intent of section 26 of the Special Economic Zones Act, 2005 and the need for a harmonious construction of the relevant notifications of 2009 and, in doing so, accorded a primacy to the statutory provisions. Accordingly, in re Tata Consultancy Services, the eligibility for refund, even where the procedure was susceptible to be resorted to for denial of exemption, under section 11B of Central Excise Act, 1944 read with section 83 of Finance Act, 1994 was laid down. Accordingly, we refer to the decision therein: "6.2 Coming to the next question, whether in respect of the services which wer....
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....ection 51 of the said SEZ Act, the said provisions prevail over the provisions contained in any other law for the time being in force. It is the avowed policy objective of the Government of India that exports should not bear the burden of taxes. If this policy objective has to be sub-served and the objective realized broader view of the provisions relating to refund has to be taken. Therefore, even if the appellant was not eligible for refund under Notification No. 09/2009-ST dated 3.3.2009, the appellants were certainly eligible for refund under Section 11B of the Central Excise Act, 1944. In this view of the matter, rejection of service tax refund is not sustainable in law." 3.16 In re IntrasPharma Ltd, the very same principle was reiterated while deciding on the refund withheld by lower authorities because of a view that upfront exemption brought into force through notification 15/2009-ST precluded eligibility for refund. The Tribunal held therein that: "11. On true and fair construction of Notifications 9/2009 and 15/2009 issued under Section 93(1) of the Act, considered in the light of the overarching provisions of Section 7 and 26 (e) of the 2005 Act, the conclusi....
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....09 and 15/2009 merely contour the process by which the benefit of exemption/immunity to tax is operationalized. Notification Nos.9/2009 and 15/2009 have provided a facilitative regime whereby a developer or units of SEZ, as recipients of taxable service are enabled the facility of claiming refund of service tax, remitted by taxable service providers in relation to the taxable services provided to a unit in a SEZ. On this harmonious construction, the immunity to service tax provided under Section 7 or 26 of the 2005 Act cannot be so interpreted as to be eclipsed the procedural prescriptions of Notification No.9/2009 or 15/2009. These notifications are calibrated to enable recipients of taxable services (exempt from liability to tax under the provisions of the 2005 Act), to claim refund of the service] tax, wherever assessed and, collected by Revenue or remitted otherwise by the taxable service provider, inadvertently. Considered in the light of this analysis, the substituted provisions, of clause/sub-paragraph 'C' of Notification No.15/2009 cannot be inferred to have imposed any disability on the recipient of services consumed wholly within the SEZ, from seeking refund of se....