AI Drafter 
TaxTMI 
TaxTMI 
2025 (12) TMI 453
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.... Department under the Registration No.AFXPD9408HSD001 for providing taxable services as defined by Section 65B (44) of the Finance Act, 1994 read with Section 66B of the Act. 2.2 On the basis of third party information was received from Income Tax Department, discrepancies were noted on comparison of the ITR and ST-3 returns leading in payment of service tax as indicated in table below:- Financial Year Value of Services Higher of b-d or c-d Service Tax ITR 26AS ST3 Rate % Payable a b c d e f g 2015-16 9044608 9071728 804158 8267570 14/14.5 1198797 2016-17 7104150 7383880 1343098 6040782 15 906117 14308352 2104914 2.3 Inquiries were made from the appellant and they were directed to furnish the details of payment of service tax along with copies of ST-3 returns & reason of difference of value as shown in service tax return & Income Tax return/Form 26AS. However, no response was received. 2.4 Show cause notice dated 26.03.2021 was issued to the appellant, asking them ....
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....e available only if the amount of penalty so determined is also been paid within the period of 30 days from the receipt of the order. (IV) I impose a penalty of Rs. 10,000/-(Rupees Ten Thousand Only) under Section 77(1)(c) of the Finance Act, 1944 read with Section 142, Section 173 and Section 174 of the CGST Act, 2017 upon them and also order for recovery of the same from the notice." 2.6 Aggrieved appellant have filed appeal before Commissioner (Appeals) which has been dismissed as per the impugned order. 2.7 Aggrieved appellant have filed this appeal. 3.1 I have heard Shri Utsav Sahgal learned Chartered Accountant appearing for the appellant and Shri Santosh Kumar learned Authorised Representative appearing for the revenue. 3.2 Arguing for the appellant learned Counsel submits that- ⮚ Issue involved in the matter is in respect of services provided by the appellant to a SEZ unit in the SEZ. The issue is squarely covered by various decisions of the Tribunal, specifically in the follow cases:- o Shapoorji Pallonji & Company Ltd. Vs CCE, Nagpur-I Final Order No.A/85265/2025 dated 25.02.2025; o Geo Dyanamics Vs CCE, Vadodara-I Fi....
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....ended by Notification 12/2013-ST dated 01.07.2013 Notification No.40/2012. and further No. vide 6.5 I also observe that for proper appreciation of the facts of the case it is necessary to first of all examine the statutory provisions related to Issue. I find that the relevant part of the Notification No. 17/2011-ST dated 01.03.2011 as amended, is reproduced as under:- "G.S.R. (E). In exercise of the powers conferred by sub-section (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 th....
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.... 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 provider, along with proof of payment for such specified services used for the authorised operations and service tax paid, in original; (iii) a declaration by the Developer or Unit of SEZ, claiming such exemption, to the effect that- (A) the specified services on which refund of service tax claimed, has been actually used for the authorized operations in the SEZ; (B) proper account of the specified services received and used for the authorised operations are maintained by the developer or unit of the SEZ and the same shall be produced to the officer sanctioning refund, on demand; ....
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....tion (A-2) to the provider of basis the On services. specified authorisation, the service provider shall provide the specified services to the SEZ Unit or the developer without payment of service tax. Thereafter the SEZ Unit or the developer shall furnish to the Jurisdictional of the said Superintendent of Central Excise a quarterly statement in Form A-3, furnishing the details of specified services received without payment of service tax. The SEZ Unit of the developer shall furnish an undertaking in Form A-1, in case if the specified services on which exemption has been claimed are not exclusively used for authorised operation. 6.8 appeal The appellant has contended in their grounds of that of of Notification the services were supplied Rs.1,30,00,000/- to SEZ Unit which was exempted from payment of service tax in terms No.17/2011-ST dated 01.03.2011 as amended, but failed to follow the procedure prescribed in the above submit any said Notification and also failed to reconciliation chart and proof of payment of service tax of Rs.5,15,339/- on the differential value of Rs. Rs.35,39,694/- as stated by the appellant in their grounds of appeal, that's why the adjudicating ....
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.... the decisions referred by the Counsel. In the case of Shapoorji Pallonji & Company Ltd. (supra) following has been held:- "6.1 The issue involved in this appeal is to determine whether the appellants have rightly claimed exemption from payment of service tax against Construction Service other than residential complex, including commercial / industrial buildings or civil Structures, provided to developers / units of Special Economic Zone (SEZ), by observing various conditions laid down in the Notification No.12/2013-ST dated 01.07.2013 applicable during the relevant time, or is liable to pay service tax on said services provided to developer or units or SEZ. "Special Economic Zones Act, 2005 [28 of 2005] ****** 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....
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....tion is as to whether the availability of exemptions under Section 26 of the SEZ Act would depend not only upon the terms and conditions prescribed under Section 26(2), but also upon the terms and conditions prescribed in the notifications issued under various enactments such as Customs Act, 1962, Customs Tariff Act, 1975, Central Excise Act, 1944, Central Excise Tariff Act, 1985, Finance Act, 1994 and Central Sales Tax Act, 1956 etc., enlisted in clauses (a) to (g) of subsection (1) of Section 26 of the Act. 20. In order to find an answer to this question, one must understand in conceptual terms, what a Special Economic Zone is. As pointed out by the Madras High Court in Nokia India Sales, a SEZ (1) is a territory outside the Customs Territory of India for the purpose of undertaking authorized operations and (2) is deemed to be a port, in land container depot, land stations and land customs station under Section 7 of the Customs Act, 1962. This is by virtue of Section 53 of SEZ Act, 2005. Keeping this core concept in mind, let us now go to the provisions of the Act. Section 7 of the Act exempts from payment of taxes, duties or cess, under all enactments specified in the F....
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.... the exemptions. 26. Having taken note of the provisions of the SEZ Act and Rules, let us have a look at the Finance Act and the relevant notifications. Section 93 of the Finance Act, 1994 reads as follows :..... 28. The SEZ Act, 2005 is also a parliamentary enactment issued later in point of time to the Finance Act, 1994 and Section 51 of the Act declares that the provisions of the SEZ Act, 2005 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. Section 51 reads as follows : "51. Act to have overriding effect. - The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act." 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 prescr....
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.... (1) exemption from payment of taxes under the enactments specified in the First Schedule, in respect of goods and services exported out of, or imported into or procured from a DTA by a unit in a Special Economic Zone or a Developer under Section 7, (2) exemption from payment of duties under the Customs Act, 1962, Customs Tariff Act, 1975, Central Excise Act, 1994, Central Excise Tariff Act, 1985, Finance Act, 1994, Finance (No. 2) Act, 2004 and Central Sales Tax Act, 1956, covered by Section 26 (1); and (3) exemption from payment of state taxes, levies and duties covered by Section 50, provided there is a state enactment to the said effect. 33. The word "prescribe" is used in the present tense in Section 26(2) and in the past tense in Section 7. Both will have the same meaning as assigned to the word under Section 2(w). The moment a set of rules is issued either in respect of matters covered by Section 7 or in respect of matters covered by Section 26(1), there is no scope for invoking any other law for imposing any other condition. 34. The benefit of exemptions granted under the notifications issued under Section 93 of the Finance Act, 199....
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.... the Rules and notifications issued under certain Acts applicable only to issues of refund, demand etc., would show that Rules 22 and 31 have independent legs to stand. 45. Therefore, the writ petition is allowed, the Order-in-Original dated 20-2-2018 is set aside and the notifications in question in so far as they relate to Special Economic Zones, are set aside. There shall be no order as to costs." 9.2 We further find that in the Special Leave Petition filed against the above order of the Hon'ble High Court by the department in SLP (Civil) Diary No.22140/2019, the Hon'ble Supreme Court had dismissed the SLP filed by the department, by upholding the order of the Hon'ble High Court. The extract of the said judgement dated 28.07.2019 is given below: 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....
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....ing 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 the SEZ Act is contained in the Notification dated March 3, 2009, but the appellant did not follow the conditions prescribed therein and, therefore, was liable to pay service tax on renting of immovable property services to SEZ units. The Department also alleged that since the appellant had classified signage as sale of space or time for advertisement, 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....
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.... modified by some machinery provisions of these Acts, including those which enable the Government to issue exemption notifications. The contradiction is between these three charging sections under which duties or service tax are levied and section 26 of the SEZ Act as per which they are exempted. Section 51 of the SEZ Act overrides the provisions of the other Acts and therefore, service tax is always exempted for the services provided to developers and units in SEZ regardless of any provisions of the Finance Act, 1994. Section 26 of the SEZ Act reads as follows: 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....
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....e SEZ Act, overridden the charge in the other laws. 33. The status of exemption notifications which are issued when the tax that is sought to be levied is out of the ambit of charging section itself was considered by the Supreme Court in the case of Larsen & Toubro. The case before the Supreme Court, in brief, was as follows. Service tax was levied under Chapter V of the Finance Act, 1994 under section 66 on taxable services. The list of taxable services was defined under section 65(105) and this list was expanded from time to time. If the taxable service was 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 16-2007 because works contracts services were a separate specie of contract kn....
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.... "6. The issue to be decided on this appeal is plain and simple enough: whether the notifications relied upon by the adjudicating authority can invalidate exemption accorded under '26. (1) Subject to the provisions of subsection (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,....
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....tion afforded by section 26 of Special Economic Zones Act, 2005 and the breach of conditions being procedural, we have no hesitation in setting aside the demand pertaining to the rendering of services to M/s Credit Suisse Service (India) Pvt. Ltd. 8. The next issue concerns the finding that the services had been rendered in India and consumed in India. The definition of'(m) "export" means - (i) taking goods, or providing services, out of India, from a Special Economic Zone, by land, sea or air or by any other mode, whether 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 i....