TaxTMI 
TaxTMI 
2020 (11) TMI 35
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....rented out some space to the SEZ units to enable them to put up boards for displaying their identification, for which it charged signage charges. The appellant believed that since the aforesaid services were being used for authorized operations by the recipient SEZ units, no service tax was required to be paid by the appellant. 3. However, a show cause notice dated October 15, 2013 was issued to the appellant proposing a demand of service tax on the rent received under the agreements, alleging violation of the conditions of Notification No. 9/2009-ST dated March 3, 2009, Notification dated March 3, 2009. The notice also proposed a demand on the signage income received under the agreements alleging that the said services were for sale of space or time for advertisement and were not covered under the list of approved services. The show cause notice also proposed demands on certain other issues, but as these demands have been dropped by the Commissioner in the impugned order, it is not necessary to make a reference to these demands. 4. The demand relating to receipt of rent was confirmed by the Commissioner for the reason that though the exemption provided under the Special Econ....
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....K. Majhi learned Authorized Representative of the Department has, however, supported the impugned order and has submitted that there is no error in the confirmation of the demands under the two heads. 8. The submissions advanced by the learned counsel for the appellant and the learned Authorized Representative of the Department have been considered. 9. The issue that arises for consideration in the appeal is about exemption from service tax on the services rendered to the SEZ units. It is not in dispute that the appellant is a co-developer of the four SEZ‟s. Two of them are situated in Gurgaon and one each in Chennai and Hyderabad. The appellant has rented out immovable property in the SEZ to units located within the SEZ and has received rent. The appellant also rented out some space in the SEZ to units to enable them to put up boards for displaying the name for identification purpose, for which it charged signage charges. 10. According to the appellant, as the aforesaid services were utilized for authorized operations by the recipient SEZ units, there was no necessity to pay any service tax. The Department, however, alleged that though the exemption provided under t....
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....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 authorized operations in a Special Economic Zone." 14. The impugned order has confirmed the demand of service tax on the ground that for the period from March 3, 2009 upto May 19, 2009, exemption on services rendered to SEZ units was available only by way of refund and thus the appellant was not eligible for ab- initio exemption, which was introduced subsequently by amendment of Notification dated March 3, 2009 by Notification No. 15/2009-ST w.e.f May 20, 2009. It would, therefore, be necessary to reproduce the aforesaid two Notifications. The relevant portion of the Notification dated March 3, 2009 is reproduced below: Notification No. 09/2009-Service Tax : Dated March 3, 2009 G.S.R. 146 (E) - In exercise of the powers conferred by subsection (1) of 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....
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....hat it has been contended by learned Counsel for the appellant that the said Notification dated March 3, 2009 would not have any relevance to the case of the appellant when it sought exemption from payment of service tax under the provisions of section 26(1)(e) of the SEZ Act read with rule 31 of the SEZ Rules. 18. The contention advanced by the learned Counsel for the appellant has force. As noticed above, section 26(1) of the SEZ Act provides that subject to the provisions of the sub-section (2), every Developer shall be entitled to exemptions and the exemption at (e) exempts every Developer from service tax under Chapter-V of the Finance Act on taxable services provided to a Developer or unit to carry on the authorized operations in a SEZ. Section 51 of the SEZ Act provides for an overriding effect to the provisions of the SEZ Act. The provisions of section 26 read with rule 31 of the SEZ Rules thus, have overriding effect over anything inconsistent contained in any other law for the time being in force, which would include the Finance Act. It needs to be noted that the Notification dated March 3, 2009 has been issued in exercise of the powers conferred by section 93 of the F....
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.... about the fact (1) that the petitioners have complied with the prescriptions contained in rule 22 of the SEZ Rules, 2006, and (2) that rule 22 of the SEZ Rulels, 2006 does not stipulate the filing of Forms A1 and A2 as prescribed in the three Notifications issued under section 93 of the Finance Act, 1994. 29. The contention of Smt. Sundari R. Pisupati, learned senior standing counsel is that there is no inconsistency between (i) the terms and conditions prescribed in the Notifications issued under section 93 of the Finance Act, 1994, and (ii) the terms and conditions prescribed in rules 22 and 31 of the SEZ Rules, 2006, and that therefore, section 51 of the SEZ Act, 2005 cannot be pressed into service. But this contention is unacceptable. 30. This is for the reason that section 26(1) of the SEZ Act made the entitlement to certain exemptions subject to provisions of subsection (2) of section 26. Section 26(1) did not make the entitlement of a developer to certain exemptions, subject to the provisions of something else other than the provisions of sub-section (2). Therefore, the firth respondent cannot read section 26(1) to mean that the exemptions listed therein a....
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....rved by the Andhra Pradesh High Court, the word "prescribe" would mean "prescribed by rules made by the Central Government under the SEZ Act," in view of the definition of "prescribed" under section 2(w) of the SEZ Act. The Notification dated March 3, 2009, which has been issued under section 93 of the Finance Act, therefore, has no application. 22. The second issue that arises for consideration is about the signage income. Under the agreement, the appellant rented out office space in the two SEZ units in return for a specified rent amount and in addition also rented out some space to these units for displaying their name for identification purpose, for which the applicant charged signage charges. Thus, according to the applicant, the activity of renting out space for display of name is part and parcel of the renting of immovable property service rendered by the appellant. The Commissioner, however, held that the appellant had classified signage income as sale of space or time for advertisement services, and exemption thereon was not admissible as the same was not covered under the list of approved services. 23. In the first instance, irrespective of classification of the sai....