Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

Comments

Print   |    |  Comment

PJ/Case Law/2013-14/1970

Refund of services is admissible as far as services are used for authorised operations within SEZ.
Case:-ZYDUS HOSPIRA ONCOLOGY PVT. LTD.  Versus  COMMR. OF C. EX., AHMEDABAD
 
Citation:- 2013 (30) S.T.R. 487 (Tri. - Ahmd.)

Brief facts:- The material facts that arise for consideration are the appellant herein is a unit situated in Special Economic Zone and procures services on which service tax is paid. The appellant utilises the services of various service providers for the manufacturing of pharma goods. The appellant had filed a refund claim for the service tax paid by them on the various services received in their unit in SEZ. The lower authorities have allowed the refund of the service tax paid on few of the items while denying the refund on the service tax paid on “Event Management, CHA Services, Management Consultancy, Commercial Training & Coaching Services, Testing, Management and Business Consultancy Service by overseas service provider, Maintenance & Repair Service” on the ground that the appellant failed to provide details as to services were wholly used in SEZ and that they were not in the approved list of services and that the said services are of the nature used within the SEZ and as well as under the terms of Notification No. 15/2009-S.T., the refund is not eligible. The adjudicating authority has rejected the refund claim. Aggrieved by such an order appellant preferred an appeal before the first appellate authority and the first appellate authority after considering the submissions made before him, did not agree with the contentions raised by the appellant and concurred with the adjudicating authority and rejected the appeal. Hence, the assessee filed the present appeal to the Tribunal.

Appellant’s contention:-Ld. Counsel discussed various findings recorded by both the lower authorities. He also drew the attention to the list of specified services which has been approved for procuring authorised activity of SEZ. Further he discussed the decision of the Division Bench of the Tribunal in the case of Tata Consultancy Services Ltd. [2013 (29)S.T.R.393 (Tri.-Mumbai)]and the judgment of this Bench in the case of Zydus Tech Ltd. in final order No. A/1570/WZB/AHD/2012, dt.3-9-2012.
 
Respondent’s contention:- Ld. DR on the other hand discussed specific findings of the adjudicating authority as regards the reasoning for denial of refund claim to the appellant in respect of the service tax paid on event management, commercial training & coaching services and testing services. It was their submission that event management has been conducted which is not in respect of any activity conducted in the SEZ and as regards the commercial training & coaching services, it is his submission that there is nothing on record to show that these services were for the purpose of unit situated in the SEZ and in respect of testing and analysis services it is his submission that what material was sent out and what material was received back, could not be correlated from the invoices raised by the service provider of the testing and analysis.
 
Reasoning of judgment:-The commissioner found that the main objection of the Revenue is that these services are not included in the approved list of specified services required by the appellant. On perusal of the list which has been appended to the appeal memoranda, it was found that all the services on which the refund claim has been rejected are mentioned in the list of approved services that may be required by the appellant in his SEZ.

As regards the minor infraction regarding event management, testing services and commercial training & coaching services, on perusal of the said invoices it was found that the service providers have clearly indicated the nature of services rendered to appellant and have also indicated their registration and the service tax amount separately. In the entire records there is no dispute as to receipt of these services in the appellant’s SEZ unit and consumed in the said unit. Yet another angle to the case is, if the appellant has directed his service provider, not to charge service tax as being consumed in SEZ unit, the service provider could have done so as per the provisions of SEZ Act. These views are fortified by the division bench of the Tribunal in the case of Tata Consultancy Services Ltd. - 2012-TIOL-1034-CESTAT-MUM = 2013 (29)S.T.R.393 (Tri.-Mum.).

As regards the refund claim of Rs. 6,66,794/- which has been rejected on the ground that the services to which this amount pertains do not have direct nexus with the authorised operations undertaken by the appellant, this stand of the department is totally incorrect. The Approval Committee which has examined this issue has issued a specific certificate to the appellant indicating the various services received by the appellant and justification for use of such services in relation to authorized operations, The jurisdictional Commissioner of Central Excise is also a member of this Approval Committee. Once the Approval Committee has given the nexus and the justification, it was totally unwarranted on the part of the adjudicating authority and the appellate authority to go into this question and come to their own findings in the matter. Therefore, rejection by the lower authorities of the refund claims of the service tax paid on various services on these grounds is bad in law and is accordingly set aside.

Coming to the next question, whether in respect of the services which were wholly consumed and which were fully exempt from payment of duty, whether the appellants can be granted refund under Notification No. 9/2009-S.T., dated 3-3-2009 as amended by Notification No. 15/2009-S.T., dated 20-5-2009 through which amendment a condition was inserted stating that the refund procedure prescribed under the said Notification shall apply only in the case of services used in relation to the authorized operations in the SEZ except for services consumed wholly within the SEZ. This view of the department is also incorrect. Notification No. 9/2009-S.T., exempts the taxable services specified in Clause (105) of Section 65 of the Finance Act. 1994 which are provided in relation to the authorized operations in a SEZ and received by a developer or units of a SEZ, whether or not they said taxable services are provided inside the SEZ, from the whole of the service tax leviable thereon under Section 66 of the Finance Act. 1994. The refund procedure given below for operationalising the exemption applies to services which are procured from outside in respect of which the service tax liability has to be discharged first and the refund claim subsequently. In the case of services which are wholly consumed within the SEZ, there is no necessity to discharge the service tax liability ab initio. That does not mean that in a case where service tax liability has been discharged, the appellant is not eligible or not entitled for refund of the service tax paid under the provisions of Section 118 of the Central Excise Act, 1944 read with Section 83 of the Finance Act. 1994. If the appellant is eligible for refund under Section 118, then the same cannot be denied on the ground that the claim was made under Notification No. 9/2009-S.T. In this case, there is no dispute that the services were provided in relation to the authorized operations of the appellant within the SEZ. From the records it is seen that the appellant has filed the refund claim within the time period provided for in Section 118 and the appellant has borne the incidence of taxation.

Services provided to a SEZ or unit in the SEZ is deemed as export as per the provisions of Section 2(m)(ii) of the SEZ Act, 2005 and as per Rule 31 of the SEZ Rules, 2006, the appellants are entitled for exemption from payment of service tax on the services which are used or provided to a unit in the SEZ. As per Section 51 of the said SEZ Act, the said provisions prevail over the provisions contained in any other law for the time being in force. It is the avowed policy objective of the Government of India that exports should not bear the burden of taxes. If this policy objective has to be sub-served and the objective realized broader view of the provisions relating to refund has to be taken. Therefore, even if the appellant was not eligible for refund under Notification No. 9/2009-S.T., dated 3-3-2009, the appellants were certainly eligible for refund under Section 11B of the Central Excise, Act. 1944. In this view of the matter, rejection of service tax refund is not sustainable in law. In view of the foregoing discussion, the judicial pronouncement and in the facts of this case, it was found that the impugned order is liable to be set aside. Impugned order is set aside and the appeal is allowed with consequential relief.
 
Decision:- Appeal allowed.
 
Comment:- The gist of this case is that refund of services is admissible as far as such services are used in the authorised operations of the SEZ and the receipt and utilisation of such services for the authorised operations is not disputed. Further, another important analogy drawn from this case was that any provision of service to SEZ is deemed export as per SEZ Act. It is the declared policy objective of the Government of India that exports should not bear the burden of taxes. If this policy objective has to be sub-served and the objective is to be realized, broader view of the provisions relating to refund claim is to be taken and refund should not be denied for irrelevant grounds.

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com