Service Tax - No tax payable on services provided to SEZ Unit: CESTAT
By TIOL News Service
AHMEDABAD, OCT 07, 2013: THE issue involved in this case is whether service of man-power supply provided by the appellant to M/s. Reliance Petroleum Ltd., Jamnagar, a unit situated in SEZ, was exempted from payment service tax for the period from 03/03/2009 to 20/05/2009, as a result of amendment carried on in the Notification No.15/2009-ST dated 20/05/2009 to Notification No.9/2009-ST dated 03/03/2009. It is the case of Revenue that during the period from 03/03/2009 to 20/05/2009, the appellant was required to discharge service tax liability and follow refund procedure prescribed under Notification No.09/2009-ST.
Aggrieved by the above order of the adjudicating authority, the appellant filed this appeal claiming that by virtue of Sec. 26 (1)(e) of the SEZ Act, 2005 (2005 Act) read with Rule 31 of SEZ Rules, the appellant was always exempt from payment of service tax.
It was argued that during the period from 03/03/2009 to 20/05/2009, exemption was correctly availed. It was further argued by the appellant that demand is hopelessly time barred because supply of duty free service had been specifically mentioned in the ST-3 returns filed by the appellants with the department and exemption from payment of service tax on services imparted to SEZ have been mentioned and the invoices also show the details.
The Tribunal observed,
Under Notification No.15/2009-ST dated 20/05/2009, exemption from payment of service to the service providers was made available by a suitable amendment in proviso (c) of para 1 of Notification No.9/2009-ST dated 03/03/2009 for the services provided inside SEZ. Before this amendment also, exemption was available to the service recipient by way of refund by the service recipient subject to certain conditions. In this regard, appellant has relied upon the judgment of Tata Consultancy Services Ltd. vs. CCE & ST (LTU) Mumbai - (2012-TIOL-1034-CESTAT-MUM) under which it was held that even if a service provider was not required to pay duty as per the amended provisions of Notification No.9/2009-ST but paid for some reasons then the service provider was entitled to refund under Section 11B of the Central Excise Act, 1944. On the same analogy when services supplied to SEZ are considered as services provided inside a SEZ unit, there is no service tax liability on such deemed export as held by CESTAT in the case of Sujana Metal Products Ltd., vs. CCE, Hyderabad - (2011-TIOL-1173-CESTAT-BANG).
The appellant has further relied upon the judgment of Intas Pharma Ltd. vs. CST, Ahmedabad - 2013-TIOL-1091-CESTAT-AHM holding that in view of the provisions of Sections 7, 26 and 51 of 2005 Act [SEZ Act, 2005], exemption to services provided to a SEZ were always (available and Notification No.9/2009-ST and No.15/2009-ST have only operationalized the exemption provided.
From the provisions contained in Section 26 (1)(e) of the SEZ Act, read with Rule 30 (10) of the SEZ Rules, 2006, it can be seen that no service tax is payable on the services provided by a service provider to a SEZ unit. Further, Sec. 51 of the SEZ Act also makes an over-riding provision that SEZ Act shall have effect even if there is anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any other law. It is accordingly held that Notification No.9/2009-ST and amended Notification No.15/2009-ST have been only issued to operationalize the exemption/immunity available to SEZ unit under Sec. 26(1)(e) of the SEZ Act, 2005. Appeal allowed.
(See 2013-TIOL-1473-CESTAT-AHM)
