TaxTMI 
TaxTMI 
2021 (9) TMI 358
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty Lakhs Eighty Three Thousand One Hundred and Seventy Five only) was paid on 21.10.2017. Both claims were paid by them on input services used in their SEZ operations during the period from 01.04.2017 to 30.06.2017 under the provisions of Notification No. 12/2013-ST dated 01.07.2013 as amended. Refund was claimed on the various input services (37 in number) used in their SEZ operations are as listed in the show cause notice no. 18/22/2017 dated 08.12.2017. The Show Cause Notice proposed rejection of the said refund claim but to the extent of Rs. 3,15,93,377/- (Three Crores Fifteen Lakhs Ninety Three Thousand Three Hundred Seventy Seven only) in appeal no. ST/30585/2019 and to the extent of Rs. 4,95,72,796/- (Four Crore Ninety Five Lakhs Seventy Two Thousand Seven Hundred and Ninety Six only) in appeal no. ST/30584/2019 on the ground that the said services are not approved by the Development Commissioner, VSEZ except for partial refund as shown in the list of invoices as per the provisions of Notification No. 12/2013-ST dated 01.07.2013. The said prayer was confirmed vide common O-I-O No. 26/2017-18 dated 16.01.2018 but only for the amount of Rs. 37,21,746/-. However the refund clai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llant has relied upon the case of DLF Assets Pvt Ltd., Vs Commissioner of Service Tax, Delhi-I [2021 (45) G.S.T.L. 176 (Tri.-Del)] wherein it was held that the Commissioner was not justified in examining whether the conditions set out in Notification were satisfied or not for grant of exemption from service tax. Reliance is also upon Metlife Global Operations Support Center (P.) Ltd., Vs COMMR., Service Tax, New Delhi reported in [2021 (46) G.S.T.L. 418 (Tri.- Del.)], wherein also it was held that service tax is not liable to be paid in view of Section 26(1) of the SEZ Act, 2005 which has an overriding effect even on the Finance Act, 1994. The order under challenge is accordingly prayed to be set aside and appeal is prayed to be allowed. 10. To rebut these contentions Learned DR has mentioned that the ocean freight is not covered under approved list. Sub clause (5) as inserted to Rule 47 of The Special Economic Zones Rules, 2006 w.e.f. 08.08.2016 is impressed upon to be applicable to the impunged refund as against the overriding effect of Section 51 of said SEZ Rules. Learned DR has relied upon the decision in Dilip Kumar case as has been referred by adjudicating authorities. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Section 55 of the SEZ Act gives power to the Central Government to make rules for carrying out the provisions of the Act. In exercise of the aforesaid powers, the Central Government made "The Special Economic Zones Rules, 2006" Rule 31 deals with the exemption from payment of service tax and is reproduced below : 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 authorized operations in a Special Economic Zone." Further Notification No. 9/2009-Service Tax dated March 3, 2009 reads as follows: G.S.R. 146(E) - In exercise of the powers conferred by sub-section (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-Service Tax, 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 do....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion by way of refund imposed under the Notification issued under the Finance Act would be inconsistent with the provisions of the SEZ Act. It also needs to be noted that the SEZ Act was enacted in 2005, much after the enactment of the Finance Act in 1994. This issue was examined by the Telangana and Andhra Pradesh High Court in GMR Aerospace Engineering Limited and another v. Union of India and Others [2019 (8) TMI 748 = 2019 (31) G.S.T.R. 596 (A.P.)]. The Andhra Pradesh High Court observed as follows : "22. It may be noted that sub-section (1) of section 26 begins with the words "subject to the provisions of sub-section (2)". Sub-section (2) authorizes the Central Government to prescribe the manner in which and the terms and conditions subject to which exemptions shall be granted to the developer or entrepreneur under sub-section (1). 23.As rightly pointed out by Sri S. Niranjan Reddy, Learned Senior Counsel appearing for the petitioner, the word "prescribe" appearing in sub-section (2) of section 26 has to be understood with reference to the definition of the word "prescribed" appearing in section 2(w) of the SEZ Act, 2005. Section 2(w) of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... space is also not left unoccupied, as the Central Government has issued a set of rules known as "the Special Economic Zones Rules, 2006", wherein the Central Government has prescribed the terms and conditions for grant of exemptions under rule 22. Therefore, there is no question of comparing the terms and conditions prescribed in rule 22 with the terms and conditions prescribed in the Notifications issued under any one of the five enactments listed in section 26(1) to find out whether there was any inconsistency. 34. The benefit of exemptions granted under the Notifications issued under section 93 of the Finance Act, 1994, are available to any one and not necessarily confined to a unit in a special economic zone. Section 93 of the Finance Act, in that 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." This Tribunal in DLF Assets Pvt. L....
X X X X Extracts X X X X
X X X X Extracts X X X X
....009, which has been issued under section 93 of the Finance Act, therefore, has no application." 13. Learned authorized representative of the Department has, however, placed reliance upon sub-rule (5) of Rule 47 of the SEZ Rules that was inserted w.e.f. August 5, 2016 to contend that the aforesaid two notifications issued under Finance Act would be applicable. This submission of Learned authorized representative of the Department cannot be accepted. It is by a notification dated August 5, 2016 that in Rule 47, sub-rule (5) was inserted after Rule (4) and the same is reproduced below : "47(5) Refund, Demand, Adjudication, Review and Appeal with regard to matters relating to authorized operations under Special Economic Zones, Act, 2005, transactions and goods and services related thereto, shall be made by the Jurisdictional Customs and Central Excise Authorities in accordance with the relevant provisions contained in the Customs Act, 1962, the Central Excise Act, 1944 and the Finance Act, 1994 and the rules made thereunder of the notifications issued thereunder." Sub-rule (5) of rule 47 has no retrospective application and, therefore, it is only w.e.f. August 5, 2016 th....