TaxTMI 
TaxTMI 
2018 (10) TMI 90
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons in respect of supplies made to SEZ units/ developers/ main contractors. The show cause notice has been adjudicated by the Commissioner and following order passed:- "21.1 I determine and confirm the demand of service tax amounting to Rs. 1,04,29,326/- (Rupees One Crore Four Lakhs Twenty Nine Thousand Three Hundred and Twenty Six Only), as detailed in Annexure A to the Show Cause Notice dated 19.12.2013, under Section 73(2) of the Finance Act, 1994. I further direct the assessee i.e. M/s Sanghvi Motors Ltd., Pune, to pay the aforesaid demand forthwith. 21.2 I determine and confirm the demand of service tax amounting to Rs. 1,56,91,121/- (Rupees One Crore Fifty Six Lakhs Ninety On'e Thousand One Hundred and Twenty One Only), as detailed in Annexure A to the Show Cause Notice dated 19.12.2013, under Section 73(2) of the Finance Act, 1994. I further direct the assessee i.e. M/s Sanghvi Motors Ltd., Pune, to pay the aforesaid demand forthwith. 21.3 I order recovery of interest, at the appropriate rate(s) as applicable during the relevant period, on demand of service tax as confirmed at paras 21.1 and 21.2 above, under the provisions of Section 75 ibid. 21.4 I impose a pen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on the services which are used or provided to a unit in SEZ. iv. Exemption under the notifications 9/2009-ST is admissible to them as sub contractors of Contractors of SEZ Unit/ developer who has placed order on them for supply of the said cranes which were to be ultimately by SEZ Units/ developers in SEZ only. v. Since there is no suppression or fraud in the case with intent to evade payment of tax, extended period of limitation is not invokable; vi. Since there I no liability for payment of service tax no penalty should be imposed on them. 4.0 Arguing for the Appellants, Sh M H Patil, Learned Advocate submitted i. The entire services of supply of tangible goods (Cranes) were used by the SEZ units/ Developers/ contractors within the SEZ unit as is evident from the Purchase Orders/ Contracts/ Certificates/ Declarations of the SEZ units/ Developers/ Contractors; tax invoices of the Appellant, log books duly and jointly signed by the representative of the Appellants and SEZ units/ Devceloper/ Contractors. ii. The demand has been made in respect of the supplies made to the party's as indicated in table 1 below: Sno Name Status Amount 1 M/s Tril Info....
X X X X Extracts X X X X
X X X X Extracts X X X X
....M K Sarangi, Joint Commissioner, Authorized representative submitted that- i. During course of audit it was found that the services in respect of appellant were claiming the benefit of exemption under notification 9/2009-ST or 17/2011ST was not admissible to them as these service were not provided to SEZ unit/ Developer, but to Contractor/ Sub Contractor of the said unit or developer. ii. No evidence has been provided by the appellant that the services provided by them to SEZ unit or entity in SEZ been consumed entired within the SEZ. iii. In respect of services provided to contractor or sub contractor of the SEZ Unit/ Developer, the benefit of exemption shall not be available, because there is privity of contract between contractor and sub contractor, and not between the SEZ unit/ developer and the appellant who are providing the services to sub contractor. The notification No 9/2009-ST as amended by Notification No 15/2009-ST and Notification No 17/2011-ST give exemption from the payment of service tax to SEZ Unit/ Developer, who can claim tax concession either by way of upfront exemption or default option by claiming refund. Since Appellants have claimed the exemptio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble 2010- 11 4,57,56,284 47,12,896 Sub total 10,12,55,602 1,04,29,329 2009- 10 4,80,10,101 49,45,040 The services provided are not provided directly to developer or SEZ Unit, so benefit of Notification not admissible 2010- 11 9,16,84,936 94,43,548 2011- 12 1,26,45,951 13,02,533 Sub total 15,23,40,988 1,56,91,121 Total 25,35,96,588 2,61,20,447 6.3 Thus it is seen that the benefit of the exemption is sought to be denied in respect of those services which have been- i. Not wholly consumed within the SEZ; ii. Provided to the contractors providing the services to SEZ unit or developer. 6.4 From the order of Commissioner it is evidenced that exmption is denied in respect of the services provided to, i. M/s Tril Info Park Ltd (IT/ ITES SEZ Deveoper), Chennai on the ground that the services have not been wholly consumed within the SEZ, because the accompanying invoices show the site as "TRIL Park Tarmani" whereas the accompanying log sheets show the site as "Tril Info Park" ii. M/s JSL Ltd SEZ Developer Bhubaneshwar, even though the service....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... benefits shall be granted to the developer or entrepreneur under sub-section (1). Rule 31 of the Special Economic Zone Rules, 2006 provides as under : "Rule 31 The exemption from payment of service tax on taxable services under section 65 of the Finance Act, 1994 (32 of 1994) rendered to a Developer or a Unit (including a Unit under construction) by any service provider shall be available for the authorised operations in a Special Economic Zone." 30 It is contended by the counsel for respondent that since the expression "authorized operations" refers to those operations which are to be carried out inside the Special Economic Zone, hence the words "in Special Economic Zone" as they appear in Section 26 and Rule 31 are to be read with "Taxable services" so as to mean that the exemption is available only with regards to to those services that are rendered in special economic zone. The aforementioned argument of the counsel for respondent has nio basis. It is well established law that statues have to be given strict interpretation. If the words of as tatue are precise and clear, they must be accepted as declaring the express intention of the legislature. It is equally well settl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stance of the transaction, the Court thinks that the case falls within the contemplation or spirit of the statute. The subject is not taxable by inference or by analogy, but only by the plain words of a statute applicable to the facts and circumstances of his case." The observations of Lord Russel in the aforementioned case were also referred by the Privy Council in the Bank of Chettinad v. Income Tax Commissioner. The Privy Council did not accept the suggestion that in revenue cases "the substance of the matter" may be regarded as distinguished from the strict legal position. 23. A similar view was taken in Commissioner of Wealth Tax. Gujarat-III. Ahmedabad v. Ellis Bridge Gymkhana , in which it was observed: "5. The rule of construction of a charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section. No one can be taxed by implication. A charging section has to be construed strictly. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all." 24. Again in the case of Diwan Bross v. Central Bank of India, Bombay an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stated so in the statute. In the absence of such express intention, the court cannot add words to the statute to lead to an interpretation which could not have been the intention of the legislature." 8.0 In case of Intas Pharma Ltd. Vs Commissioner Service Tax Ahmedabad [2013 (32) STR 543 (T-Ahmd)] it was observed: "6. It requires to be noticed that exercising powers under Section 93(1) of the act, Government issued a Notification exempting the taxable services specified in Section 65(105) of the Act, when provided in relation to authorized operations in Special Economic Zone and received by the developers of the units in the SEZ, whether or not the said taxable services are provided inside the SEZ, from the whole of the Service Tax leviable thereon under Section 65 of the Act. Clause 'c" of this Notification (15/2009-ST) substitutes clause "c" of the earlier Notification No 9/2009-ST dated 3..03 2009. Clause "c" of the Notification No 9/2009-ST provides that the exemption claimed by the developer or units of SEZ shall be provided by way of refund of Service Tax of the specified services used in relation to authorized operations in the SEZ. Notification No 9/2009-ST was issue....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Z shall be provided by way of refund of Service Tax paid on the specified services used in relation to the authorized operations in the SEZ, except for services consumed wholly within the SEZ. 11. On true and fair construction of Notification Nos. 9/2009 and 15/2009 issued under Section 93(1) of the Act, considered in the light of the overarching provisions of Sections 7 and 26(e) of the 2005 Act, the conclusion appears compelling that neither Notification Nos. 9/2009 nor 15/2009 disentitle immunity to Service Tax enjoined by the provisions of the 2005 Act. It therefore appears that Notification Nos. 9/2009 and 15/2009 merely contour the process by which the benefit of exemption/immunity to tax is operationalised. 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 p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 the authorised operations in the Special Economic Zone, approved from the Approval Committee (hereinafter referred to as the specified services); (b) the developer or units of Special Economic Zone claiming the exemption actually uses the specified services in relation to the authorised operations in the Special Economic Zone; (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; (d) the developer or units of Special Economic Zone claiming the exemption has actually paid the service tax on the specified services; (e) no CENVAT credit of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone has been taken under the CENVAT Credit Rules, 2004; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f actual payment of service tax by such developer or unit to service provider; (g) the refund claim shall be accompanied by the following documents, namely:- (i) a copy of the list of specified services required in relation to the authorised operations in the Special Economic Zone, as approved by the Approval Committee; (ii) documents for having paid service tax; (iii) a declaration by the Special Economic Zone developer or unit, claiming such exemption, to the effect that such service is received by him in relation to authorised operation in Special Economic Zone. (h) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after satisfying himself that the said services have been actually used in relation to the authorised operations in the Special Economic Zone, refund the service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone; (i) where any refund of service tax paid on specified services is erroneously refunded for any reasons whatsoever, such service tax refunded shall be recoverable under the provisions of the said Finance Act and the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... services consumed wholly within the Special Economic Zone, shall be subject to the following conditions" shall be substituted. Notification No 17/2011-ST was issued in supersession of notification No 9/2009-ST and read as follows: G.S.R. (E). - In exercise of the powers conferred by subsection (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act) read with sub-section 3 of section 95 of Finance (No.2), Act, 2004 (23 of 2004) and sub-section 3 of section 140 of the Finance Act, 2007(22 of 2007) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 9/2009-Service Tax, dated the 3rd March, 2009, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide G.S.R.146(E), dated the 3rd March, 2009, 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 Finance Act, chargeable to tax under section 66 or section 66A of the Finance Act , r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted to the extent of the ratio of export turnover to the total turnover for the given period to which the claim relates, i.e., Maximum = refund service tax paid on X Export specified services used turnover of for SEZ Authorised SEZ Unit for Operations shared with the period DTA Unit for the period _________________________________________________________________________________________ Total turnover for the period Explanation.- For the purposes of condition (d),- (1) "total turnover" means the sum total of the value of,- (i) all output services and exempted services provided, including the value of services exported; (ii) all excisable and non-excisable goods cleared, including the value of the goods exported; (iii) bought out goods sold, during the period to which the invoices pertain and the exporter claims the facility of refund under this notification. (2) "turnover of SEZ Unit" shall mean the sum total of the value of final products and output services exported during the period of which the invoices pertain and the exporter claims the facility of refund under this notification; (e) any Developer or Unit of SEZ claiming the exemption shall declare that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Form A-3; (d) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after due verification, allot a service tax code number to the Developer or Unit of SEZ, referred to in clause (c), within seven days from the date of receipt of the said declaration, in Form A-3; (e) claim for refund shall be filed, within one year from the end of the month in which actual payment of service tax was made by such developer or unit to the registered service provider or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit; (f) the refund claim shall be accompanied by the following documents, namely:- (i) a copy of the list of specified services as are required for the authorized operations in the SEZ, as approved by the Approval Committee; wherever applicable, document specified in 2(c), i.e. , declaration in Form A-1; (ii)invoice or a bill or as the case may be, a challan, issued in accordance with the provisions of Finance Act or rules made thereunder, in the name of the Developer or Unit of a SEZ, by the registered service p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lation to a SEZ. Explanation.- For the purposes of this notification, ―statutory auditor‖ refers to a Chartered Accountant who audits the annual accounts of the Developer or Unit of a SEZ for the purposes of the Companies Act, 1956 (1 of 1956) or the Income Tax Act, 1961(43 of 1961). 10.0 Notification No 9/2009-ST as amended by the Notification No 15/2009-ST and subsequently Notification No 17/2011-ST issued under Section 93 of the Finance Act, 1994, could not have eclipsed or restricted the exemption provided by the Section 26(1)(e) of the SEZ Act, 2005. In respect of the exemption notifications issued under Section 93(1) of the Finance Act, 1994 also it has been clarified as follows: Circular No.142/11/2011 - ST F. No.354 /30 /2011-TRU Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs Tax Research Unit North Block, New Delhi 18^th May 2011 To Chief Commissioners of Central Excise and Service Tax (All), Director General (Service Tax), Director General (Central Excise Intelligence), Director General (Audit), Commissioners of Service Tax (All), Commissioners of Central E....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m A-2 may be used. It is clarified that only such services shall be considered as exclusively used by SEZ Unit/Developer, for the authorised operations, as they satisfy the following criteria: (i) Invoice is raised in the name of the SEZ Unit/Developer or in the invoice, it is mentioned that the taxable services are supplied to the SEZ Unit/Developer for the authorised operations; (ii) Such services are approved by the 'Unit Approval Committee (UAC)', as required for the authorised operations; (iii) Receipt and use of such services in the authorised operations are accounted for in the books of accounts of the SEZ Unit/ Developer. 3.- - 10 ...... ...... 11.0 During the course of arguments and in the Appeal paper book appellants have produced the copy of the invoices and attached log sheets in respect of the supplies made by them to SEZ Unit developers/ Units. There is no dispute about the fact that these invoices, logsheets and contracts were also produced and examined by the Commissioner during the course of adjudication. From the perusal of the invoices and log sheets it is quite evident that each log sheet is signed jointly by the crane opera....