TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 304
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....ned service tax registration certificate No.AAACS6994CST020. The appellants also avail CENVAT credit of central excise duty paid on inputs and capital goods, as well as service tax paid on input services as per the provisions of CENVAT Credit Rules, 2004 (for short, referred to as 'CCR'). 2.2 During the course of audit conducted by the Department on the books of account maintained by the appellants, the Department had enquired about the appellant's availing of exemption benefit under Notification No.12/2013-ST dated 01.07.2013. On scrutiny of the documents and the books of accounts for the period October, 2013 to March, 2015, the Department had interpreted that the appellants have not fulfilled certain requirements for availing the duty exemption viz., conditions of the notification dated 01.07.2013, Special Economic Zone Rules, 2005 and the circulars issued thereon. The Department had initiated show cause notice proceedings for demand of CENVAT Credit availed by the appellants on various grounds, the details of which are summarized below: Period Notification No. reference Conditions/Requirement not fulfilled by the appellants as alleged by the department Reasons for....
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....ai - 2023 (72) G.S.T.L. 99 (Tri.-Mumbai) and upheld by the Hon'ble Supreme Court in Civil Appeal No.549 of 2023 (ii) Cummins Turbo Technology Vs. Commissioner of Customs, Central Excise & Central Tax, Indore - (2023) 12 Centax 334 (Tri.-Del.) (iii) GMR Aerospace Engineering Ltd. Vs. Union of India - 2019 (312) G.S.T.L. 596 (A.P.) and upheld by the Hon'ble Supreme Court in Special Leave Petition (Civil) Diary No.22140 of 2019 (iv) Hiranandani Builders Vs. Commissioner of Service Tax - VII, Mumbai - 2023 (9) TMI 73 - CESTAT MUMBAI. 4. On the other hand, learned Authorised Representative for Revenue reiterated the findings of the Principal Commissioner in the impugned order, and submitted that in order to claim exemption, the appellants has to provide the documents mentioning the name of the contractor, even though it is supplied to SEZ and in the absence of the same, exemption cannot be extended to them. Further, by citing the judgement of the Hon'ble Supreme Court in the case of Commissioner of Customs (Import),Mumbai Vs. Dilip Kumar and Company - 2018 (361) E.L.T. 577 (S.C.), he stated that exemption must be strictly complied with. In the absence of ap....
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.... xxx xxx xxx xxx CHAPTER VI SPECIAL FISCAL PROVISIONS FOR SPECIAL ECONOMIC ZONES Exemptions, drawbacks and concessions to every Developer and entrepreneur. 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 Customs Act, 1962 (52 of 1962) or the Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force, on goods imported into, or services provided in, a Special Economic Zone or a Unit, to carry on the authorised operations by the Developer or entrepreneur; (b) exemption from any duty of customs, under the Customs Act, 1962 (52 of 1962) or the Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force, on goods exported from, or services provided, from a Special Economic Zone or from a Unit, to any place outside India; (c) exemption from any duty of excise, under the Central Excise Act, 1944 (1 of 1944) or the Central Excise Tariff Act, 1985 (5 of 1986) or any other law for the time being in force....
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....oper or Codeveloper, and all the documents in such cases shall bear the name of the Developer or Codeveloper along with the contractor or sub-contractor and these shall be filed jointly in the name of the Developer or Co-developer and the contractor or sub- contractor, as the case may be: Provided also that the Developer or Co-developer, as the case may be, or the Special Economic Zone Unit shall be responsible and liable for proper utilization of such goods in all cases." We also find that the provisions relating to Special Economic Zones (SEZ) was initially provided under the Customs Act, 1962 vide Chapter X-A under Sections 76A to 76N ibid, which was omitted with effect from 11.05.2007 under Section 90 of the Finance Act, 2007 (Act 22 of 2007), upon bringing a separate legislation governing the SEZs i.e., SEZ Act, 2005. Customs Act, 1962 Chap. X-A (containing Sections 76-A to 76-N) omitted by Act 22 of 2007, Section 99 (w.e.f.11-5-2007). Prior to its omission, Chap. X-A read as under:" CHAPTER X-A. SPECIAL PROVISIONS RELATING TO SPECIAL ECONOMIC ZONE 76-A. Notification of special economic zone.-The Central G....
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....as on the date of such admission or removal, as the case may be, and where such date is not ascertainable, on the date of payment of the duty. 76-G. Authorised operations.-All goods admitted to a special economic zone shall undergo such operations including processing or manufacturing as may be specified in the rules made in this behalf. 76-H. Goods utilised within a special economic zone.-(1) The Central Government may make rules in this behalf to enumerate the cases in which goods to be utilised inside a special economic zone may be admitted free of duties of customs and lay down the requirements which shall be fulfilled.(2) Goods utilised contrary to the provisions of rules made under sub-Section (1) shall be chargeable to duties of customs in the same manner as provided under clause (b) of Section 76-F as if they have been removed for home consumption. 76-I. Drawback on goods admitted to a special economic zone.-Any goods admitted to a special economic zone from the domestic tariff area for the purposes authorised under this Chapter shall be eligible for drawback under Section 75 as if such goods are export goods for the purposes of that section. ....
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....m payment of service tax in respect of services provided to SEZ have been dealt with in the case of GMR Aerospace Engineering Limited (supra) by the Hon'ble Andhra Pradesh High Court by holding that standalone exemptions under Section SEZ law are not subject to provisions of any other law, including Finance Act, 1994, and therefore such exemption cannot be denied for mere non-filing forms, as these are not required under SEZ law. The relevant paragraphs of order of the Hon'ble High Court in the above case is extracted and given below: "16. That takes us to the main contention revolving around the SEZ Act, 2005, SEZ Rules, 2006, Finance Act 1994 and the notifications issued by the Government. Before looking at the interplay of all these, it may be useful to first take note of the scheme of the Act. The broad scheme and the features of the SEZ Act, 2005 was taken note of by a Division Bench of the Madras High Court to which one of us (VRSJ) was a party, in Nokia India Sales Pvt. Ltd. v. the Assistant Commissioner (CT), Sriperumbudur Assessment Circle, Chennai - 2017 (101) VSP 361 (Mad)...... 18. In the light of the above admitted facts, the only question that arises....
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....aring in Section 2(w) of the SEZ Act, 2005. Section 2(w) of the Act reads as follows : "prescribed" means prescribed by rules made by the Central Government under this Act." 24. Therefore, the terms and conditions subject to which the exemptions are to be granted under sub-section (1) of Section 26 should be prescribed by the Rules made by the Central Government under the SEZ Act, 2005. Being conscious of this fact, the executive has incorporated Rule 22 in the SEZ Rules, 2006 issued in exercise of the power conferred by Section 55 of the SEZ Act. It is not necessary to extract Rule 22, since there is no dispute 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 Rules, 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. 25. In other words, the 5th respondent does not dispute the fact that the petitioners have fulfilled the terms and conditions stipulated in Rule 22 of the SEZ Rules, 2006 and that if those Rules are considered on a stand alone basis, the petitioner....
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....scribe". 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 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 five enactments listed in Section 26(1) to find out whether there was any inconsistency. 31. Support can be drawn for the above interpretation, from Section 50 of the SEZ Act, 2005 also. Section 50 of the SEZ Act, 2005 enables State Governments to enact laws for the grant of exemption from state taxes, levies and duties. Since a Central Law cannot provide for exemption from the levy of State taxes, Section 50 merely enables the State Governments to enact laws. 32. A combined reading of Sections 7, 26 and 50 of the SEZ Act, 2005, would show that SEZ Act, 2005 speaks of three different types o....
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....d. Therefore, the area relating to exemption is completely occupied by the rules. 43. It is only the issues relating to refund, demand, adjudication, review and appeal, which were left unoccupied by the SEZ Act and the Rules framed thereunder. Realising the vacuum in respect of these specific areas, sub-rule (5) was inserted under Rule 47. Sub-rule (5) of Rule 47 makes a reference to the provisions of the three enactments namely Customs Act, 1962, Central Excise Act, 1944 and Finance Act, 1994 and the Rules made thereunder and the notifications issued thereunder. It is by virtue of this sub-rule (5) that the authorities can fall back upon the Rules and notifications issued under those three enactments. The very fact that sub-rule (5) was inserted would show, that but for its insertion, the respondents cannot fall back upon the Rules framed under the Customs Act etc., for dealing with a question of refund, demand, adjudication etc. 44. The issue can be looked at from another angle also. If sub-rule (5) of Rule 47 had also included the procedure for grant of exemption within its purview, then the stand taken by the Department would be perfectly valid. The very fact ....
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.... The Special Leave Petition is accordingly dismissed. Pending applications, if any, are disposed of. (SANJAY KUMAR-I) AR-CUM-PS (SAROJ KUMARI GAUR) COURT MASTER In view of the detailed analysis and categorical decision of the Hon'ble High Court of Andhra Pradesh which was upheld by the Hon'ble Supreme Court, the issues under dispute in the present case is no more open to debate, and a different view cannot be taken by this Tribunal. 9.3. We also note that the Hon'ble Supreme Court had dealt with the issue of "What is the interpretative rule to be applied while interpreting a tax exemption provision/notification when there is an ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied?" in the case of Dilip Kumar and Company (supra). We find that in the present case, the question of ambiguity in interpretation are not the issue to be dealt, and therefore we do not find force in the argument of learned AR, that the same should apply to the present case. 10. We also find that the Co-ordinate Bench of the Tribunal in the case of Cummins Turbo Technology (supra) have he....
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....sement, it was not entitled to claim exemption. 11. In order to appreciate the contentions advanced by learned Counsel for the appellant and the learned Authorized Representative of the Department, it will be appropriate to refer to the relevant provisions. Section 26 of the SEZ Act deals with exemptions, drawbacks and concessions to every Developer and entrepreneur. The relevant provisions are reproduced below: "26. Exemptions, drawbacks and concessions to every Developer and entrepreneur.- (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) To (d) ** ** ** (e) exemption from service tax under Chapter V of the Finance Act, 1994 (32 of 1994) on taxable services provided to a Developer or Unit to carry on the authorized operations in a Special Economic Zone; (f) to (g) ** ** ** (2) The Central Government may prescribe the manner in which, and the terms and conditions subject to which, the exemptions, concessions, drawback or other benefits shall be granted to the Developer or entrepreneur under sub-se....
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.... 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 Customs Act, 1962 or the Custom Tariff Act, 1975 or any other law for the time being in force, on goods imported into, or service provided in, a Special Economic Zone or a Unit, to carry on the authorised operations by the Developer or entrepreneur; (b) exemption from any duty of customs, under the Customs Act, 1962 or the Customs Tariff Act, 1975 or any other law for the time being in force, on goods exported from, or services provided, from a Special Economic Zone or from a Unit, to any place outside India; (c) exemption from any duty of excise, under the Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or any other law for the time being in force, on goods brought from Domestic Tariff Area to a Special Economic Zone or Unit, to carry on the authorised operations by the Developer or entrepreneur .. (e) exemption from service tax under Chapter-V of the Finance Act, 1994 on taxable services provided ....
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.... provided as a part of a works contract which involved both rendering the service and transfer or deemed transfer of goods, exemption notifications were issued by the Government towards abatement of the value of the goods used in the services. Later, on 1-6- 2007, works contract service, itself was introduced as a service. The question before the Supreme Court was whether works contract service could have been taxed under various other heads prior to this date. The Supreme Court held that there was no charge on works contract service prior to 1-6-2007 because works contracts services were a separate specie of contract known to commerce and there was no levy on such contracts prior to 1-6-2007. It was pleaded on behalf of the Revenue that abatements were given through various exemption notifications prior to 1-6-2007. The Supreme Court held as follows: 43. We need only state that in view of our finding that the said Finance Act lays down no charge or machinery to levy and assess service tax on indivisible composite works contracts, such argument must fail. This is also for the simple reason that there is no subterfuge in entering into composite works contracts containing el....
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....pecial Economic Zone or a Unit, to carry on the authorised operations by the Developer or entrepreneur; (b) exemption from any duty of customs, under the Customs Act, 1962 or the Customs Tariff Act, 1975 or any other law for the time being in force, on goods exported from, or services provided, from a Special Economic Zone or from a Unit, to any place outside India; (c) exemption from any duty of excise, under the Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or any other law for the time being in force, on goods brought from Domestic Tariff Area to a Special Economic Zone or Unit, to carry on the authorised operations by the Developer or entrepreneur; (d) drawback or such other benefits as may be admissible from time to time on goods brought or services provided from the Domestic Tariff Area into a Special Economic Zone or Unit or services provided in a Special Economic Zone or Unit by the service providers located outside India to carry on the authorised operations by the Developer or entrepreneur; (e) exemption from service tax under Chapter-V of the Finance Act, 1994 on taxable services provided to a Developer or Unit to car....
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....ther physical or otherwise; or (ii) supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer; or (iii) supplying goods, or providing services, from one Unit to another Unit or Developer, in the same or different Special Economic Zone:' in Special Economic Zones Act, 2005 is substantially different from that in the rules which delineate 'exports' from 'domestic supply' in the scheme of service tax law and, in view of section 51 of Special Economic Zones Act, 2005, have to be read in the context of the exemption afforded by section 26 of Special Economic Zones Act, 2005 and not in terms of Finance Act, 1994. Consequently the prism through which the adjudicatory perception has been enunciated does not apply to the facts of the service rendered by the appellant. Accordingly, the demand for allegedly rendering of services within India does not sustain." 11.2 We further find that in the Civil Appeal filed by the department against the aforesaid order of the Tribunal holding that exemption provided under Section 26 of the SEZ Act, 2005 has over riding effect and that the breach of conditions is procedural, t....