By TIOL News Service

MUMBAI, JUNE 21, 2016: THE appellants are a developer of SEZ and filed a refund claim in respect of services availed by them in terms of Notification no. 12/2013-ST dated 1.7.2013. The said notification provides exemption from service tax by way of refund to developer of SEZ.

Clause 3(I) of the exemption reads-

"The SEZ unit or the Developer shall get an approval by the Approval Committee of the list of the services as are required for the authorized operations (referred to as the 'specified services' elsewhere in the notification) on which the SEZ Unit or Developer wish to claim exemption from service tax."

The refund claim was rejected by the lower authorities on the ground that the receipt of specified services was not approved at the time when the said services were availed.

Before the CESTAT, the appellant submitted that there is no condition that the list of services is to be approved before availing the notification. They relied on the decision in Mahindra Engineering Services Ltd. - 2014-TIOL-2534-CESTAT-MUM wherein the Tribunal had observed -

"6. I have carefully considered the submissions made by both sides. It is noted that Notification no. 9/2009 does not state that the list of services required in relation to authorized operations in the SEZ should be got approved from the approval committee before providing the services. The appellants have pointed out that they had filed the refund claim after the list was approved. Thus, the claim is in consonance with the requirement of notification."

It is also emphasized that the conditions of Notification no. 9/2009-ST were similar to the conditions of Notification no. 12/2013-ST dated 1.7.2013.

The AR submitted that if the exemption is to be claimed the conditions of Notification have to be fulfilled at the time when the services were availed. Inasmuch as in the instant case, at the time when the services were availed, they were not approved by the Development Commissioner, SEEPZ, SEZ, Mumbai.

The Bench observed -

"4. …in the case of Mahindra Engineering Services (supra) cited by the Counsel, the argument that the said notification is an exemption notification and therefore at the time to avail the exemption, the conditions of notification have to be fulfilled, was not taken by the Revenue. In the instant case, I find that the Notification no. 12/2013 provides the exemption by way of refund. To avail the exemption, the assesse must fulfill the conditions of the notification at the time of availing the services. In the instant case, admittedly the appellants had not got the impugned services approved by the Approval Committee. In view of the above, at the time of availing services the condition 3(I) of the notification was not fulfilled. In such circumstances, refund cannot be granted…."

In fine, the appeal was dismissed.

(See 2016-TIOL-1479-CESTAT-MUM)