SEZ Units Eligible for Service Tax Refund on services like rent-a-cab, catering & business support  

Nokia India Private Limited Vs Commissioner of GST and Central Excise (CESTAT Chennai)

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, considered appeals filed by a Special Economic Zone (SEZ) unit challenging the rejection of refund claims for service tax paid on specified services used in authorised operations. The appellant had claimed refunds for service tax paid on rent-a-cab operator services, business support services, and outdoor catering services. The refund claims were initially rejected by the adjudicating authority and subsequently upheld by the Commissioner (Appeals) on the ground that the appellant failed to provide sufficient evidence to establish that these services were used in connection with authorised manufacturing activities.

The appellant argued that the services in question were approved by the Development Commissioner as “specified services” and were used in authorised operations. It was further submitted that the issue had already been decided in the appellant’s favour in an earlier Tribunal order for a prior period, where such services were held to qualify as “input services” eligible for refund. The appellant contended that the rejection of refunds for the subsequent period was therefore unsustainable.

The Revenue reiterated the findings of the lower authorities and raised specific objections regarding two invoices—one lacking details of service tax paid and another not bearing the appellant’s name—arguing that refunds based on these invoices were not admissible. The appellant conceded and did not press claims relating to these invoices.

Upon consideration, the Tribunal noted that the appellant, as an SEZ unit, had the option either to procure specified services without payment of service tax or to pay the tax and subsequently claim a refund. The Tribunal found that the issue was no longer res integra, as it had already been decided in the appellant’s own case for an earlier period, wherein the same services were held to be input services used in manufacturing activities and thus eligible for refund.

Relying on the earlier decision, the Tribunal held that the appellant was entitled to a refund of service tax paid on rent-a-cab, business support, and outdoor catering services used in connection with authorised operations. However, it denied refund claims relating to the two defective invoices identified, amounting to Rs.7,02,674/- and Rs.22,624/-. Accordingly, the appeals were partly allowed, granting refunds except for the amounts linked to the disputed invoices.

SEO-Friendly Titles with Descriptions

SEZ Units Eligible for Service Tax Refund on services like rent-a-cab, catering & business support  
Description: The case addressed whether services like rent-a-cab, catering, and business support qualify as input services for SEZ refund claims. The Tribunal held they are eligible for refunds when used in authorised operations, reinforcing prior rulings.

Service Tax Refund Allowed for SEZ Services Due to Established Precedent on Input Services
Description: The issue was whether previously recognised input services could be denied refund in a later period. The Tribunal ruled in favour of consistency, allowing refunds based on its earlier decision.

Refund Denial Overturned as Approved SEZ Services Deemed Linked to Authorised Operations
Description: The dispute involved rejection of refunds due to alleged lack of proof of usage in manufacturing. The Tribunal held that approved services are presumed linked to authorised operations and eligible for refund.

CESTAT Allows Refund on SEZ Services Because They Qualify as Input Services Under Prior Ruling
Description: The case examined if certain operational services qualify as input services for tax refund. The Tribunal reaffirmed that such services are eligible based on an earlier binding decision.

Partial Relief Granted in Refund Case Due to Invoice Deficiencies Despite Service Eligibility
Description: While most service tax refunds were allowed, the issue of defective invoices led to partial denial. The Tribunal ruled that proper documentation is essential even when service eligibility is established.

FULL TEXT OF THE CESTAT CHENNAI ORDER

M/s. Nokia India Private Limited (herein after referred as the appellant) has filed these appeals against rejection of the refund claim filed in respect of the service tax paid by them on the ‘specified services’ used in the authorised operations. Both the appeals are having the common issue and hence they are all taken up together for decision by a common order.

2. The facts of the case are that the appellant is a SEZ unit. The appellant has filed refund of service tax paid on the specified services used in authorised operations, namely Rent-a-cab operator service, Business support service and Outdoor catering service and claimed refund of the same. However, show cause notices have been issued to reject the refund claims on the ground that the appellant has not produced any evidence to substantiate their claim that these services were used in connection with the authorized operations, ie, manufacturing activities, in this case. On adjudication, the ld. Adjudicating authority has rejected refund claim amounting to Rs.26,30,761/- and Rs.20,99,852. On appeal, the Ld. appellate authority, Commissioner (Appeals) has upheld the rejection of the said refund claims. Aggrieved against the rejection of the refund claims, the appellant has filed these appeals.

3. The appellant submits that they have paid service tax in respect of specified services approved by the Development Commissioner namely Rent-a-cab operator service, Business support service and Outdoor catering service and claimed refund of the same. The appellant submits that the lower authorities have not produced any evidence to substantiate their allegation that these services were not used in connection with the manufacturing activities.

3.1. In this regard, the Ld. Counsel appeared on behalf of the Appellant submits that the issue is no longer a res-integra as the said issue has already been decided by their Tribunal in appellant’s own case for the earlier period November 2009 to December 2009, vide final order numbers 42340-42342/2016 dated 25.11.2016, wherein it has been categorically held that Rent-a-cab operator service, Business support service and Outdoor catering service are ‘input services’ used in the manufacturing activities and the appellant was eligible for the refund of the service tax paid on the said ‘input services’. Accordingly, he submits that the rejection of refund claim in the impugned order for the subsequent period is legally not sustainable. Thus, he prayed for setting aside the impugned orders and allowing the refunds claimed by them.

4. The Ld. AR appearing for Revenue reiterated the findings in the impugned orders. He further submits that in respect of one invoice pertaining to rent a cab service, the invoice submitted does not have the service tax paid mentioned therein. Another invoice submitted by the appellant was not in the name of the appellant company. Accordingly, he submits that the amount of Rs.7,02,674/- and Rs.22,624/- claimed by them on the basis of the said invoices are not eligible for refund.

4.1. In this regard the Ld. Counsel appealing for the Appellant submits that he is not pressing the refund pertaining to the above said two specific invoices pointed out by the AR.

5. Heard both sides and perused the appeal records.

6. I find that the appellate is a SEZ unit rendering software services. The development commissioner has approved certain ‘specified services’ eligible for exemption which are used in their authorized operations. Accordingly, the appellant is eligible for the exemption and procure the said services without payment of service tax. Alternatively, the appellant have the option to pay the service tax and claim the same as refund. In the present case, in respect of the services such as rent-a-cab operator service, business support service and out-door catering service etc., the appellate has chosen the option of paying service tax and claiming the refund. I find that the lower authorities have rejected the refunds claimed by the appellant on the ground that these services were not used in connection with the manufacturing activities.

7. I find that the issue is no longer res-integra as the said issue has already been decided by this Tribunal in appellant’s own case for the earlier period November 2009 to December 2009, vide final order numbers 42340-42342/2016 dated 25.11.2016, wherein it has been categorically held that Rent-a-cab operator service, Business support service and Outdoor catering service are ‘input services’ used in the manufacturing activities and the appellant was eligible for the refund of the service tax paid on the said input services. Accordingly, by relying on the decision of this Tribunal cited supra, I hold that the appellant is eligible for the refund of the service tax paid by them in respect of the services namely, Business support service, Rent-a-cab service and Out­door catering service, which were used in connection with the manufacturing activities.

8. I find that in respect of one invoice, the service tax paid has not been mentioned. Also, in respect of another invoice submitted by the appellant, the correct address of the appellant was not mentioned. The Ld. Counsel appearing on behalf of the appellant has agreed that they are not pressing for the refunds pertains to these two invoices. Accordingly, I hold that the appellant is not eligible for the refund pertaining to these two invoices.

8.1. Thus, I hold that the appellant is eligible for the refund of service tax paid in respect of services such as Business support service, Rent-a-cab service and Out-door catering service. However, the appellant is not eligible for the refund pertaining to two invoices amounting to Rs.7,02,674/- and Rs.22,624/-, as discussed in para 8 supra.

9. In the result, the appeals filed by the appellant are partly allowed as discussed in para 8 and 8.1 supra, with consequential relief, if any, as per law.

(Order pronounced in the open court)