2021 (8) TMI 450

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.... (SEZ). Though they claimed exemption as per the Notification No.40/2012-ST dt.20.06.2012 w.e.f. 01.06.2012, they did not produce necessary documents in the nature of A1 and A2 certificates. Therefore could not claim the benefit of the above notification. The Department was of the view that appellant has thus short paid service tax under man power services. 3. Thirdly, the appellant was engaged in packing of goods for exports and though the activity falls under 'Business Support Service', the appellant has not paid service tax. Show cause notice was issued proposing to demand service tax under the above categories and also proposing to impose penalties. After due process of law, the original authority confirmed the demands, interest and imposed penalties. Aggrieved by such order, the appellant is now before the Tribunal. 4.1 On behalf of the appellant Ld. Counsel Shri M.N. Bharathi appeared and argued the matter. He submitted that with regard to the first issue, the department is of the view that reimbursable expenses has to be included in the taxable value to discharge service tax liability. In fact, these reimbursable charges are nothing but actual charges in the nature of ....

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....upported the findings in the impugned order. 6. The first issue in these appeals is with regard to the inclusion of reimbursable expenses in the taxable value, It is brought out from facts that the appellant has not included the charges in the nature of electricity, diesel generator charges, fuel charges, telephone charges, water charges, stationery chargers etc. incurred for providing clearing and forwarding services in the taxable value. These are actual reimbursements made to the appellants by their customers. On such score, the issue stands covered by the decision of the Hon'ble Apex Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. (supra). We therefore have no hesitation to hold that the demand under this category cannot sustain and requires to be set aside, which we hereby do. 7. The second issue is with regard to the demand under man power supply service. Admittedly, the services were provided to service recipient situate in SEZ. It is also brought out that as per Notification NO.40/2012-ST dated 20.06.2012, the service tax is exempted. However to claim such exemption the appellant has to produce the following :- (i) List of services a....

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....t 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 sub-section (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 5th respondent cannot read Section 26(1) to mean that the exemptions listed therein are (1) subject to the provisions of sub-section (2) of Section 26, and (2) also subject to the terms and conditions prescribed in the Customs Act, 1962, the Customs Tariff Act, 1975, the Central Excise Act, 1944, the Central Tariff Act, 1985 and the Finance Act, 1994. This is especially so, since the authority of the Central Government to prescribe the terms and conditions subject to which exemptions may be granted under Section 26(1), flows only out of sub-section (2) of Section 26. The word "prescribe" is verb. Generally no enactment defines the word "prescribe". But the SEZ Act 2005 defines the word "prescribe" under Section 2(w) to mean the rules framed by the Central Government under the SEZ Act, 2005. The spac....

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....sense is a general power of exemption available in respect of all taxable services. But, Section 26(1) is a special power of exemption under a special enactment dealing with a unit in a special economic zone. Therefore, the notifications issued under Section 93 of the Finance Act, 1994 cannot be pressed into service for finding out whether a unit in a SEZ qualifies for exemption or not. 35. For driving home her contention that SEZ Act, 2005 and the rules framed thereunder do not constitute a complete Code in themselves, Smt. Sundari R. Pispuati, Learned Senior Standing Counsel relied upon two decisions of the Supreme Court and one decision of the Madras High Court. In Ravula Subba Rao v. Commissioner of Income Tax, Madras - AIR 1956 SC 604 relied upon by the Learned Senior Standing Counsel, the question that arose before the Supreme Court was whether the requirement under the Income Tax Rules (as they existed then) for all partners to sign an application for registration personally, would exclude the applicability of the Powers of Attorney Act, 1882, which empowers every agent to do what the principal is capable of doing. The Supreme Court held in that context that the Inc....