TaxTMI 
TaxTMI 
2026 (3) TMI 15
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....ich superseded by Notification No.12/2013-ST dated 01.07.2013 without observing the procedures and conditions as stipulated and thereafter, charged an amount of Rs.53,55,600/- for providing the exempted service to their client leading to non-payment of service tax of Rs.6,42,672/-. 2.1 On scrutiny of the ST-3 Returns for the period October, 2013 to March, 2014, it was found that the appellant being a provider of Construction Services other than residential complex including commercial/industrial buildings or civil structures have shown an amount of Rs.53,55,600/- charged for providing exempted service in addition to furnishing gross amount/gross total amount of Rs.59,45,600/-. It was also found that the appellant has mentioned against an option column for availing the benefit of exemption in the said ST-3 Returns to the effect of providing exempted service under Notification No.40/2012-ST dated 20.06.2012, which shows that the service tax with cess has been assessed and paid on the Net Taxable Value derived after deducting the amount of exempted service i.e. Rs.53,55,600/- from the gross taxable amount i.e. Rs.59,45,600/-. 2.2 Notification No.40/2012-ST dated 20.06.2012 as su....
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.... 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 (VRS)) 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 fo....
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....ction 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 petitioners would be e....
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....he SEZ Act 2005 defines the word "prescribe". 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 typ....
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....herefore, 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 subrule (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 that ....
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.... 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 held that there is no legal authority to levy and collect central excise duty, customs duty or service tax for goods or services supplied for authorised operations of SEZ developers and unit....
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....f 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-section (1)." 12. Section 51 of the SEZ Act further provides overriding effect to the provisions of the SEZ Act and it is reproduced below: "51. Act to have overriding effect The provis....
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....m 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 to a Developer or Unit to carry on the authorised operations in a Special Economic Zone; 29. Section 51 of the SEZ Act states that the provisions of SEZ Act override any other provisions of other laws. It r....
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....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 elements both of transfer of property In goods as well as labour and services. 44. We have been informed by counsel for the revenue that several exemption notifications have been granted qua service tax "le....
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.... 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 carry on the authorised operations in a Special Economic Zone; (f) exemption from the securities transaction tax leviable under section 98 of the Finance (No. 2) Act, 2004 in case the taxable securitie....
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....er 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, the Hon'ble Supreme Court had dismissed the appeal filed by the department, by upholding the order of the Tribunal. The copy of the said judgement of the Hon'ble Supreme Court is extracted and given bel....
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.... the SEZ area, which are exempted from payment of service tax; however, the Id. adjudicating authority has chosen to deny the exemption on the ground that the exemption is available only to the main contractor who were engaged for providing service in the SEZ area; the said exemption is not available to sub-contractors who provide services to the main contractor. The appellant submits that they have rendered the service of 'erection, commissioning and installation' within the SEZ and hence they are eligible for the exemption and hence no service tax is payable by them for the services rendered within the SEZ area." 8. Further, in the case of Sai Wardha Power Company Ltd. (supra), the Hon'ble Bombay High Court has stated the facts, which are as under: "3. Few facts giving rise to the petition are stated thus - The petitioner is a power generating unit in the Special Economic Zone (hereinafter referred to as "SEZ" for the sake of brevity) in Warora. The unit of the petitioner is governed by the provisions of the Special Economic Zones Act, 2005 (hereinafter referred to as "the Act of 2005"). By a Notification issued by the Government of India, Ministry of....
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....the Service Tax in advance or not to pay the same, subject to the conditions provided in the notifications. For seeking ab initio exemption, the petitioner-unit was required to secure the approval of the list of services, as are required for the authorized operations of the unit on which the unit desires to claim exemption from Service Tax from the 'Approval Committee'. The Approval Committee constituted under the provisions of Section 13 of the Act of 2005 and which comprises of responsible officers had granted approval to the list of services for which the petitioner desired to claim exemption from Service Tax. Admittedly, the petitioner-unit also furnished a declaration, in Form A-1 verified by the Specified Officer of the SEZ along with the list of specified services. Once, the SEZ unit secures the approval of the 'Approval Committee' to the list of the services on which the SEZ unit wishes to claim exemption from Service Tax and furnishes a declaration, in Form A-1 verified by the Specified Officer of the SEZ, it is rightly submitted on behalf of the petitioner that the respondent No. 2 or for that matter, any Jurisdictional Deputy Commissioner of Central Excise or Assistant C....