ST - Notfn. 12/2013 - Once SEZ unit secures approval of 'Approval Committee' and furnishes declaration in Form A-1 verified by Specified Officer of SEZ, jurisdictional DC/AC is enjoined with duty to issue authorization in Form A-2 - WP allowed: High Court
By TIOL News Service
MUMBAI, JULY 22, 2015: THE petitioner is a power generating unit in the SEZ.
The notification(s) in question pertain to exemption granted to the services received by a unit located in a SEZ or a Developer of SEZ and used for the authorised operation. They are notification 9/2009-ST and the superseding notifications 17/2011-ST, 40/2012-ST &12/2013-ST as amended by 7/2014-ST.
Certain conditions are required to be complied while availing ab initio exemption from payment of service tax. Under Clause 2 of Notification No.12 of 2013, the SEZ unit was required to get the list of taxable services for the authorized operations of the SEZ unit, approved by the 'Approval Committee'. The SEZ unit was required to furnish a declaration in Form A1, verified by the Specified Officer of the SEZ along with the list of specified services. On the basis of the declaration made in Form A1, an authorization was liable to be issued by the Jurisdictional DC or AC, as the case may be, to the SEZ unit in Form A2. (This is where the petitioner faced the wall.)
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Furthermore, in view of amending Notification No.7 of 2014, the respondent Dy. Commr.was enjoined with a duty to issue Form A2 in favour of the petitioner unit within a period of fifteen days from the issuance of Form A1.
However, despite the approval of the list of the specified services and the issuance of Form A1 by the Specified Officer concerned, it is the case of the petitioner that the respondent refused to issue Form A2 in favour of the petitioner thereby depriving the petitioner of the benefit of the Notifications of the years 2011 and 2013.
Be that as it may, the Dy. Commr. also asked the petitioner unit to supply some documents and which according to the petitioner is not called for as the Dy. Commr. was not entitled to make any further enquiry in the matter after the issuance of Form A1 and was enjoined with a duty to issue Form A2.
The petitioner has, therefore, approached the High Court seeking a relief that a direction be issued to the Dy. Commissioner, Chandrapur to forthwith issue the authorization in Form A2 to the petitioner.
After considering the submissions made by both sides the High Court observed -
+ On a perusal of the notifications, it is clear that the petitioner had an option to either pay 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 A1 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' and furnishes a declaration in Form A1 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 Commissioner of Central Excise is enjoined with a duty to issue the authorization, in Form A2.
+ It is clear from Notification No. 12 of 2013 that the respondent No.2 was obliged to issue the authorization, in Form A2 to the petitioner unit in the circumstances of the case.
+ Mere issuance of Form A2 by the respondent No.2 would not absolve the petitioner unit of its liability to pay the service tax and cesses along with interest on delayed payment, if it is subsequently found that the petitioner unit has not used the services exclusively for the authorized operations as per the undertaking, in Form A1.
+ If that is so, the respondent No.2 could not have refused the authorization to the petitioner unit in Form A2 on the ground that some of the claims made by the petitioner for refund had been rejected in the past.
+ Ample safeguards are provided by Notification No.12 of 2013.
+ We find that the respondent No.2 was not justified in refusing the authorization in Form A2 to the petitioner unit.
+ There is nothing in Notification No.12 of 2013 that prohibits an SEZ unit from availing the option of not paying the service tax ab initio, if the Positive Net Foreign Exchange is not achieved.
+ We do not find any propriety in the action on the part of the respondent No.2 in refusing the authorization to the petitioner unit in Form A2 merely because M/s.Krishnapatnam Port Company Limited had failed to pay the service tax in respect of some services rendered to the petitioner unit in the past.
Holding that the respondent No.2 (Dy. Commr.) has illegally denied the benefit of Notification No. 12 of 2013 to the petitioner unit, the Writ petition was allowed.
(See 2015-TIOL-1637-HC-MUM-ST)
