TaxTMI 
TaxTMI 
2026 (7) TMI 1544
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....sar Steel Ltd., as SEZ Unit situated at Hazira, Gujarat. The Department formed the view that since the services where physically performed outside the Special Economic Zone, exemption under Notification no. 4/2004 - ST dated 31.03.2004 was unavailable and consequently demanded Service Tax under the Finance Act, 1994. 3. The appellant consistently contended before the Adjudicating Authority as well as the Commissioner (Appeals), that the services were admittedly provided to a SEZ Unit and were utilized for its authorized operations. It was submitted that exemption flowed directly from Section 26 (1) (e) of the Special Economic Zones Act, 2005 read with Rule 31 of the SEZ Rules, 2006 and that by virtue of Section 51 of the SEZ Act, the provisions of the SEZ Act have overriding effect over any inconsistent provision contained in any other enactment. It was argued that Notification No. 4/2004-ST, being a delegated legislation issued under the Finance Act could not curtail the substantive exemption granted under the parent statute. 4. The Learned Counsel for the appellant reiterated the above submissions and also submitted that the controversy is no longer resintegra. In view of t....
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....that the Service should necessarily be performed within the territorial boundary of the Special Economic Zone. The emphasis of the statute is upon the identity of the recipient and the purpose for which the service is utilized, namely, authorized operations. 10. Section 51 of the SEZ Act further declares that the provisions of the Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force. Therefore, where Parliament has granted a substantive exemption under SEZ Act, the same cannot be curtailed by a notification issued under the Finance Act, 1994. A delegated piece of legislation cannot impose restrictions which the parent statute itself does not contemplate. 11. The issue now stands concluded by the judgment of the Hon'ble Supreme Court in Arkay Logistics Ltd., supra. The Hon'ble Supreme Court affirmed the decision of Tribunal Ahmadabad and held that exemption under Section 26 of the SEZ Act cannot be denied merely because the services were performed outside the physical limits of the SEZ, once it is established that such services were received and utilized by the SEZ unit for its authorized operations. The Hon'ble Sup....
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....ces consumed within the SEZ. The services used for export of goods manufactured by SEZ are to be treated as those consumed within the SEZ. Further that, the provisions of SEZ Act has overriding effect over the provisions of any other law in terms of Section 51 of SEZ Act, 2005. Section 26 of SEZ Act, 2005 provides various exemptions and concessions from duties and taxes. A harmonious reading of Section 51 and Section 26 of the SEZ Act would reveal that the units of SEZ are eligible for exemption from service tax for authorized operations of SEZ units. Export goods manufactured by SEZ unit are the most important authorized operation of such SEZ unit. Hence, the services consumed for such operation is to be exempted under the Notification No. 4/2004. The word "consumption" used in Notification No. 4/2004 has to be construed as service rendered to a developer/unit in SEZ. The service recipient/unit is situated in SEZ and therefore eligible for the benefit of exemption. 5.6 Without prejudice, we also find that prior to introduction of Notification No. 4/2004, exemption from service tax for services provided to developer/unit in SEZ was covered by Notification No. 17/2002-S.T.,....
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....ble for the authorised operations in a Special Economic Zone." 7. This Rule also states that exemption from service tax is available to services rendered to a unit in the SEZ for the authorised operations. There is no dispute that the containers provided to the units in the SEZ have been used by such units for the authorised operations, namely, for bringing inputs for manufacture and carrying the finished goods out of SEZ for export purposes. Therefore, we are of the view that the impugned services relating to supply of containers in the SEZ are exempt from payment of Service tax. We, accordingly, set aside the impugned order and allow the appeals. From the above decision, it can be seen that the issue involved in the present case is absolutely identical to that of the above case, following the ratio of the aforesaid decision, in the present case too, the service provided for the authorized operation by the appellant to the SEZ based service recipient, demand of service tax is not sustainable. Since, we decide the matter on merit, we are not going into the issue of limitation. 06. From the discussions above, and also the decisions cited supra, we are of t....