Case Law Details
Reliance Industries Ltd. Vs Commissioner of Central Excise (CESTAT Mumbai)
The appeal challenged an order of the Commissioner (Appeals), Mumbai Zone I, which upheld rejection of the appellant’s claim for refund of service tax paid on banking and other financial services provided by NSDL. The appellant, a developer that had established a unit in a Special Economic Zone (SEZ) at Jamnagar, sought refund of Rs. 12,32,233 under Section 26 of the Special Economic Zones Act, 2005, contending that, as an SEZ developer, it was not liable to bear service tax on services received for authorised operations.
The lower authorities rejected the refund on the ground that the services related to an Initial Public Offering (IPO), the invoices were raised on the appellant’s corporate office in Mumbai rather than the SEZ unit, and the services were not consumed within the SEZ. The Commissioner (Appeals) also held that raising finance from outside sources did not constitute authorised operations and that Notification No. 9/2009-ST, which provided a refund mechanism, was prospective and therefore inapplicable.
The appellant contended that the refund was based on Section 26 of the Special Economic Zones Act, 2005, which had a wider scope than Notification No. 4/2004-ST, and that the IPO was undertaken solely to raise funds for establishing and operationalising its SEZ undertaking. It also argued that it had borne the incidence of service tax and was therefore entitled to claim the refund. There was no dispute that the appellant operated in a notified SEZ, that the SEZ unit was its sole undertaking, and that the IPO was intended for operationalising that undertaking.
The Tribunal examined the statutory framework of the Special Economic Zones Act, 2005, particularly Sections 26, 51 and 53, which grant exemption from service tax on taxable services provided to a developer or unit for authorised operations, give overriding effect to the Act over inconsistent laws, and deem an SEZ to be outside the customs territory for authorised operations. The Tribunal observed that goods and services procured for authorised operations are entitled to exemption, with approvals granted by the relevant Approval Committee.
The Tribunal noted that Notification No. 9/2009-ST, issued on 3 March 2009, introduced a procedural mechanism for granting exemption through refund in respect of services used for authorised operations, including services provided outside the geographical boundaries of the SEZ, subject to specified conditions. It further observed that Notification No. 15/2009-ST subsequently amended the procedure relating to services wholly consumed within the SEZ.
The Tribunal found that the refund application had been filed in May 2007, when Notification No. 9/2009-ST did not exist and Notification No. 4/2004-ST was the only operative notification. It observed that Notification No. 4/2004-ST had been issued before the enactment of the Special Economic Zones Act, 2005 and could not fully implement the statutory exemption introduced by that Act. The Tribunal held that the absence of an adequate procedural mechanism between 2006 and 2009 could not deprive SEZ developers of the statutory exemption granted by Parliament.
According to the Tribunal, the 2009 notifications merely operationalised the exemption already conferred by the Special Economic Zones Act by prescribing procedures for availing refund or upfront exemption. The Tribunal held that procedural notifications could not curtail or defeat the statutory exemption under Section 26.
The Tribunal further observed that the approval granted by the Approval Committee for authorised operations was not in dispute. It disagreed with the lower authorities’ conclusion that there was no nexus between the NSDL services and the SEZ operations, holding that the appellant’s SEZ undertaking was its sole investment and that the IPO-related services were intended for operationalising that undertaking. Therefore, the services were in relation to authorised operations.
The Tribunal also relied upon earlier Tribunal decisions holding that Section 26 of the Special Economic Zones Act, 2005 has primacy over procedural notifications and that the notifications merely facilitate implementation of the statutory exemption without restricting it. It noted that these decisions recognised that exemption cannot be denied on procedural grounds where services are received for authorised operations of an SEZ developer or unit.
Holding that the distinction drawn by the lower authorities between the corporate office address and the SEZ site address was misconceived in the facts of the case, the Tribunal concluded that the services provided by NSDL were for authorised operations in the Special Economic Zone. It therefore held that the appellant was entitled to the refund claimed under Section 26 of the Special Economic Zones Act, 2005. Accordingly, the appeal was allowed, and the refund of service tax was granted.
FULL TEXT OF THE CESTAT MUMBAI ORDER
This appeal lies against order-in-appeal no SB(81)81/511/2010 dated 29th June 2010 of Commissioner of Central Excise (Appeals), Mumbai Zone I which rejected the appeal of M/s Reliance Industries Ltd. ( known as M/s Reliance Petroleum Ltd. before its merger) against the order of the Assistant Commissioner, Service Tax, Mumbai W that found the appellant ineligible for refund of service tax included in the bill for availment of banking and other financial services provided by M/s NSDL. The appellant is the developer and has set up a unit in the Special Economic Zone at Jamnagar. Refund was sought on 9th May 2007. According to the appellant, as developer unit in a Special Economic Zone, they are not liable to be charged with duties or taxes under section 26 of Special Economic Zones Act, 2005 and, having been charged for the same, they were entitled to refund of Rs. 12,32,233/- borne by them.
2. The impugned order held that taxes are exempt to the extent that they are consumed within a Special Economic Zone but that the said tax had been discharged on services related to Initial Public Offering (IPO) which was billed to the corporate office of the appellant at Mumbai and not to its Zone under implementation at Jamnagar. It was found by the first appellate authority that raising finance from outside sources did not constitute authorized operations.
3. Learned Counsel for appellant referred to decisions of the Tribunal in Norasia Container Line v Commissioner of Central Excise, New Delhi [2011 (923) STR 295 (Tri-Del)], Reliance Ports & Terminal Ltd v Commissioner of Central Excise & Service Tax Rajkot [2013-TIOL-1473-CESTAT-AHM], IntasPharma Ltd v Commissioner of Service Tax Ahmedabad [2013-TIOL-1091-CESTAT-AHM] and Tata Consultancy Services Ltd v Commissioner of Central Excise & Service Tax, Mumbai [2012-TIOL-1034-CESTAT-MUM]. Learned Authorized Representative reiterated the findings in the impugned order and contended that the exemptions were available only when the nexus with authorized operations within the Special Economic Zone is established.
3.1 As contended by the appellant, they are in the business of setting up and operating a Special Economic Zone; that they needed funds to set up a unit in the said Special Economic Zone for which an Initial Public Offering (IPO) was contemplated. According to the appellant, the refund claim was backed by section 26 of Special Economic Zones Act, 2005 and not notification 4/2004-ST with the former possessing a much wider scope than the notification of 2004 because Section 26 of Special Economic Zones Act, 2005 did not restrict its application to the premises of the demarcated area that was notified as a Special Economic Zone. It was further pointed out that the impugned order erred in holding that raising funds in the capital market was not within the scope of authorized operations. It was also contended that it was incorrect on the part of first appellate authority to hold that appellant had no locus standii because the incidence of tax had been borne by the appellant though collected and deposited by M/s NSDL, the service provider. It was also contended that the impugned erred in its finding that it was only with effect from 3rd March 2009 with notification no 9/2009-ST that refund of service tax was allowed.
3.2 There are no disputes on the essential facts viz., that appellant operates in a demarcated area, that the unit in the Special Economic Zone was the sole undertaking of the appellant, and that the Initial Public Offering was intended for the operationalizing of the undertaking in connection with which banking and other financial services were provided by Ws NSDL.
3.3 Special Economic Zones are established in conformity and in accordance with the scheme embodied in the Special Economic Zones Act, 2005. Exemptions from customs and excise duties and service tax are available to developers/co-developers of the Special Economic Zones as well as to entrepreneurs who set up exporting units within the Zone to extent that goods are procured or services are received for authorized operations, Authorized operations qua the developer/co-developer are those permitted by the Board of Approvals while that of units are such as are in pursuance of the Letter of Approval (LoA) issued by the Development Commissioner to manufacture permitted goods or render permitted services for being Net Foreign Exchange Positive. Permission for procurement of goods and services required for authorized operations of the developer/co-developer are accorded by the Approval Committee chaired by the Development Commissioner and in which the Commissioner of Central Excise & Customs is a member. The services permitted for use in authorized operations of the unit are also approved by the Approval Committee. Such goods and services are entitled to exemption from duties or taxes.
3.4 The comprehensive Special Economic Zones Act provides for exemption of duties and taxes besides according overriding effect when in conflict with other laws and for deeming the Zone to be outside the Customs territory in relation to authorized operations. The relevant provisions of the Special Economic Zones Act, 2005 are as below:
26. (1) Subject to the provisions of sub-section (2), every Developer and the entrepreneur shall be entitled to the following exemptions, drawbacks and concessions, namely: –
(a) exemption from any duty of customs, under the Customs Act, 1962 or the Custom Tariff Act, 1975 or any other law for the time being in force, on goods imported into, or service provided in, a Special Economic Zone or a Unit, to carry on the authorised operations by the Developer or entrepreneur;
(b) exemption from any duty of customs, under the Customs Act, 1962 or the Customs Tariff Act, 1975 or any other law for the time being in force, on goods exported from, or services provided, from a Special Economic Zone or from a Unit, to any place outside India:
(c) exemption from any duty of excise, under the Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or any other law for the time being in force, on goods brought from Domestic Tariff Area to a Special Economic Zone or Unit, to carry on the authorised operations by the Developer or entrepreneur;
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(e) exemption from service tax under Chapter-V of the Finance Act, 1994 on taxable services provided to a Developer or Unit to carry on the authorised operations in a Special Economic Zone;
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51. (1) The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.
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53. A Special Economic Zone shall, on and from the appointed day, be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations.
3.5 While the exemption to imported or domestically procured goods can be implemented and monitored through the Authorized Officers of the Special Economic Zones in accordance with the procedures laid down in the Special Economic Zone Rules, 2006, services, owing to their intangibility, are handicapped in so far as monitoring the delivery and usage in relation to authorized operations is concerned. For that reason, Department of Revenue has in March 2009, notified specific procedures based on the potential for availment both within the Zone and outside. The relevant notification is reproduced below:
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
New Delhi, the 3rd March, 2009.
Notification No.9/2009-Service Tax
G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), and in supersession of the notification of the Government of India, Ministry of Finance ( Department of Revenue), No. 4/2004-ServiceTax, dated the 31st March, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section ( i ) dated the 31st March, 2004, vide, G.S.R.248(E), dated the 31st March, 2004, except as respects things done or omitted to be done before such supersession, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services specified in clause (105) of section 65 of the said Finance Act, which are provided in relation to the authorised operations in a Special Economic Zone, and received by a developer or units of a Special Economic Zone, whether or not the said taxable services are provided inside the Special Economic Zone, from the whole of the service tax leviable thereon under section 66 of the said Finance Act:
Provided that-
(a) the developer or units of Special Economic Zone shall get the list of services specified in clause (105) of section 65 of the said Finance Act as are required in relation to the authorised operations in the Special Economic Zone, approved from the Approval Committee (hereinafter referred to as the specified services);
(b) the developer or units of Special Economic Zone claiming the exemption actually uses the specified services in relation to the authorised operations in the Special Economic Zone;
(c) the exemption claimed by the developer or units of Special Economic Zone shall be provided by way of refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone;
(d) the developer or units of Special Economic Zone claiming the exemption has actually paid the service tax on the specified services;
(e) no CENVAT credit of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone has been taken under the CENVAT Credit Rules, 2004;
(f) exemption or refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone shall not be claimed except under this notification.
2. The exemption contained in this notification shall be subject to the following conditions, namely.––
(a) the person liable to pay service tax under sub-section (1) or sub-section (2) of section 68 of the said Finance Act shall pay service tax as applicable on the specified services provided to the developer or units of Special Economic Zone and used in relation to the authorised operations in the Special Economic Zone, and such person shall not be eligible to claim exemption for the specified services:
Provided that where the developer or units of Special Economic Zone and the person liable to pay service tax under sub-section (2) of section 68 for the said services are the same person, then in such cases exemption for the specified services shall be claimed by that person;
(b) the developer or units of Special Economic Zone shall claim the exemption by filing a claim for refund of service tax paid on specified services;
(c) the developer or units of Special Economic Zone shall file the claim for refund to the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be;
(d) the claim for refund shall be filed, within six months or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit, from the date of actual payment of service tax by such developer or unit to service provider;
3. The exemption contained in this notification shall apply only in respect of service tax paid on the specified services on or after the date of publication of this notification in the Official Gazette.
3.6 Certain changes to allow the service providers to be relieved of the responsibility to collect and deposit the tax was incorporated by amending notification No.15/2009-ST dated 20th May 2009.
In the said notification, (i.e. Notification No.9/2002-ST).
(A) in paragraph 1, in the proviso,?
the sub-paragraph (c), the following shall be substituted, namely:-
(c) the exemption claimed by the developer or units of Special Economic Zone shall be provided by way of refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone except for services consumed wholly within the Special Economic Zone;”
(2) for sub-paragraph (d), the following shall be substituted, namely:
“(d) the developer or units of Special Economic Zone claiming the exemption, by way of refund in accordance with clause (c), has actually paid the service tax on the specified services;”
3.7 The refund application was made in May 2007 when the exemption of service tax did not have any enabling procedure other than notification no 4/2004-ST dated 31st March 2004. Rejection of the claim was effected in December 2008 when the same notification prevailed. The original authority was of the view that Initial Public Offering did not comply with the requirement of the notification that services on which exemption was sought had to be consumed within the Zone as the invoices were raised on the corporate office of the appellant at Mumbai. Justifying the rejection, the original authority placed reliance on the principle of equivalence enunciated by the Hon ble Supreme Court in All India Federation of Tax Practitioners v Union of India [2007(007)STR0625(SC)] in finding that the invoices were not raised on the location of the Unit in the Zone. The appeal against this rejection that was disposed off in the impugned order contended that the exemption was claimed on account of section 26 of Special Economic Zone while the rejection was based on notification 4/2004-ST dated 31st March 2004 and that the service had been rendered in connection with the authorized operations. Commissioner (Appeals) upheld the order of the original authority with the finding that the applied notification was well within the exemption envisaged by the Special Economic Zones Act, 2005 requiring consumption within the Zone and that the nature of the service precluded compliance with the condition of consumption within the Zone. While acknowledging the charges made by the exemption notification No. 9/2009-ST dated 3rd March 2009 it was held to be effective only from date of publication of notification and therefore not applicable in the present case. It was also held that the limitation provision in the latter notification too would not permit sanction of the refund claim.
3.8 On a perusal of the two notifications that were not in existence when the original authority considered while considering the application for refund and which the first appellate authority, though acquainted with those existence, held to be inapplicable for reason that (a) the exemption is available only to service tax paid after the notification has come into force (paragraph 3 of notification 9/2009-ST dated 3rd March 2009) and (b) that the applicant had not sought refund within six months of payment of tax (condition (f) in paragraph 2 of notification 9/2009-ST dated 3rd March 2009) the objective of such an unambiguous procedure is amply clear.
3.9 Admittedly, the notification 9/2009-ST was not in existence and, hence, not the basis of the claim preferred by the appellant before the jurisdictional Central Excise officer. At the same time, it is, undoubtedly, the operational procedure put in place for implementing the provision in the Special Economic Zones Act, 2005 granting exemption of service tax for authorized operations. It is also the first such enabling procedure after the Special Economic Zones Act, 2005 was brought into force on 10th February 2006.
3.10 The two notifications, in conjunction, have given effect to the statutory promise by devising two methods for availing the exemption by upfront exemption when the service is rendered within the geographical boundaries of the Special Economic Zone and by the refund route where the physical performance of service is not within the boundaries but is intended for the authorized operation of the developer or unit. A pre-approval and verification system was also established in the same notifications necessitated by the potential for wrongful availment arising from the intangibility of services.
3.11 The exemption notification that was the immediate predecessor of this elaborate procedure, notification no 4/2004-ST, and the only one that was in existence when the tax was piad by the appellant and the application for refund was processed. This notification, though found to be consistent with the Special Economic Zones Act, 2005 by the two lower authorities, would not appear to be so. That exemption procedure having been notified well before the enactment of the Special Economic Zones Act, 2005 and with intent to provide the benefit within the limited scope of a scheme that had its authority, not from a statute but from the Foreign Trade Policy, cannot be claimed to be in consonance with the Special Economic Zones Act, 2005. Given the reasons for rejection of the claim by the original authority and for endorsement by the first appellate authority, viz., the less than adequate description eligibility in notification no 4/2004-ST, it would appear that there was no facilitative notification for almost three years between 2006 and 2009. Whatever may be the justifications for this delay in providing the mechanism for effecting the exemption, the statutory exemption has to be made available to its intended beneficiaries.
3.12 The Special Economic Zones Act, 2005 and the Rules framed thereunder are self-contained and comprehensive enough to facilitate and enable the exemptions that are statutorily embodied. There did not appear to be any ambiguity in extending the exemption to goods imported or indigenous because tangibility of goods made it possible to control its movement from source to consumption. Services, owing to its intangibility, was not so amenable and service providers, without the assurance of having interpreted the exemption in the proper manner, would not like to take the risk of being held liable for recovery of such tax along with interest and penalties thereon on a later date. Clear of such a contingency cannot be allowed to deprive an exemption conferred by parliamentary enactment and to defeat the very foundation of the enactment.
3.13 From the notifications of 2009 issued by Department of Revenue, it is clear that the test of utilization of service for authorized operations is left to the wisdom of the Approval Committee and the satisfaction of the jurisdictional Assistant Commissioner regarding its actual utilization. This is in conformity with the scheme envisaged by the Special Economic Zones Act, 2005. The approval of the Approval Committee is not in question in the instant case. However, the original authority could not find a link between the service rendered by M/s NSDL and the operations of the appellant as developer/unit in the Zone. The two lower authorities have erred in arriving at this conclusion. The undertaking in the Zone was the sole investment of the appellant and hence any service provided to the appellant cannot but be in relation to its authorized operations.
3.14 In re Norasia Containers Lines, the Tribunal considered the appeal filed against a demand for tax that had not been included in the invoice raised for supply of taxable services while providing containers to unit in a Special Economic Zone which the jurisdictional Central Excise authority felt was not consumed within the Zone. It uncannily resembles the transaction that occurred between the appellant in the matter before us and M/s NSDL and which, undoubtedly, would have confronted M/s NSDL had they chosen the route adopted by M/s Norasia to render the service without including tax in the consideration. Hence, it would be appropriate to recall the fmdings of the Tribunal in that case:
4. We have considered the submissions from both the sides. The notification No. 4/2004 uses expression for consumption of services within such Special Economic Zone , but at the same time also uses the expression taxable services provided to a unit of the SEZ . Both the expressions are required to be read harmoniously. In any case, the subsequently enacted SEZ Act further provides in Section 26 as under :
Section 26.
Exemptions, drawbacks and concessions to every Developer and entrepreneur – (1) Subject to the provisions of sub-section (2), every Developer and the entrepreneur shall be entitled to the following exemptions, drawbacks and concessions, namely :-
(a) xxxx
(b) xxxx
(c) xxxx
(d) xxxx
(e) Exemption from service tax under Chapter V of the Finance Act, 1994 (32 of 1994) on taxable services provided to a Developer or Unit to carry on the authorised operations in a Special Economic Zone;
(f) xxxx
(g) xxxx
5. It is clear from the above provision that there is no restriction regarding the consumption of the services and the exemption is extended to the services rendered to a unit in the SEZ for the purpose of authorised operation in the SEZ.
6. Rule 31 of the Special Economic Zone Rules, 2006 provides as under : Rule 31
The exemption from payment of service tax on taxable services under section 65 of the Finance Act, 1994 (32 of 1994) rendered to a Developer or a Unit (including a Unit under construction) by any service provider shall be available for the authorised operations in a Special Economic Zone.
7. This Rule also states that exemption from service tax is available to services rendered to a unit in the SEZ for the authorised operations. There is no dispute that the containers provided to the units in the SEZ have been used by such units for the authorised operations, namely, for bringing inputs for manufacture and carrying the finished goods out of SEZ for export purposes. Therefore, we are of the view that the impugned services relating to supply of containers in the SEZ are exempt from payment of Service tax. We, accordingly, set aside the impugned order and allow the appeals. The Stay applications also stand disposed of
3.15 Later decisions of the Tribunal on dispute that arose, notwithstanding the notification of the elaborate procedures of 2009 and in the face of the rigid attitude of the refund sanctioning authorities, concerned as they were with the temptation to deny eligible exemptions, expounded on the intent of section 26 of the Special Economic Zones Act, 2005 and the need for a harmonious construction of the relevant notifications of 2009 and, in doing so, accorded a primacy to the statutory provisions. Accordingly, in re Tata Consultancy Services, the eligibility for refund, even where the procedure was susceptible to be resorted to for denial of exemption, under section 11B of Central Excise Act, 1944 read with section 83 of Finance Act, 1994 was laid down. Accordingly, we refer to the decision therein:
6.2 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. 09/2009-ST dated 3.3.2009 as amended by Notification No. 15/2009-ST 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. 09/2009-ST 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 the 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 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. If the appellant is eligible for refund under Section 11B, then the same cannot be denied on the ground that the claim was made under Notification No. 09/2009-ST 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 11B and the appellant has borne the incidence of taxation.
6.3 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 appellant is 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. 09/2009-ST 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.
3.16 In re IntasPharma Ltd, the very same principle was reiterated while deciding on the refund withheld by lower authorities because of a view that upfront exemption brought into force through notification 15/2009-ST precluded eligibility for refund. The Tribunal held therein that:
11. On true and fair construction of Notifications 9/2009 and 15/2009 issued under Section 93(1) of the Act, considered in the light of the overarching provisions of Section 7 and 26 (e) of the 2005 Act, the conclusion appears compelling that neither Notification 9/2009 nor 15/2009 disentitle immunity to service tax enjoined by the provisions of the 2005 Act. It therefore appears that Notification Nos. 9/2009 and 15/2009 merely contour the process by which the benefit of exemption/immunity to tax is operationalised. Notification Nos. 9/2009 and 15/2009 have provided a facilitative regime whereby a developer or units of SEZ, as recipients of taxable service are enabled the facility of claiming refund of service tax, remitted by taxable service providers in relation to the taxable services provided to a unit in a SEZ. On this harmonious construction, the immunity to service tax provided under Section 7 or 26 of the 2005 Act cannot be so interpreted as to be eclipsed the procedural prescriptions of Notification Nos. 9/2009 or 15/2009. These Notifications are calibrated to enable recipients of taxable services (exempt from liability to tax under the provisions of the 2005 Act), to claim refund of the service tax, wherever assessed and collected by Revenue or remitted otherwise by the taxable service provider, inadvertently. Considered in the light of this analysis, the substituted provisions, of clause/sub-paragraph ‘C’ of Notification No. 15/2009 cannot be inferred to have imposed any disability on the recipient of services consumed wholly within the SEZ, from seeking refund of service tax remitted on such transactions, by the providers of such services.
3.17 This was followed by the Tribunal again in re Reliance Ports & Terminals Ltd as below:
6. The appellant has further relied upon the judgment of Intas Pharma Ltd. vs. CST Ahmedabad (supra) 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. Para 11 of the above judgment is reproduced below:
“11. On true and fair construction of Notifications 9/2009 and 15/2009 issued under section 93(1) of the Act, considered in the light of overarching provisions of Section 7 and 26 (e) of the 2005 Act, the conclusion appears compelling that neither Notification 9/2009 nor 15/2009 disentitle immunity to service tax enjoined by the provisions of the 2005 Act. It therefore appears that Notification Nos. 9/2009 and 15/2009 merely contour the process by which the benefit of exemption/immunity to tax is operationalized. Notification Nos.9/2009 and 15/2009 have provided a facilitative regime whereby a developer or units of SEZ, as recipients of taxable service are enabled the facility of claiming refund of service tax, remitted by taxable service providers in relation to the taxable services provided to a unit in a SEZ. On this harmonious construction, the immunity to service tax provided under Section 7 or 26 of the 2005 Act cannot be so interpreted as to be eclipsed the procedural prescriptions of Notification No.9/2009 or 15/2009. These notifications are calibrated to enable recipients of taxable services (exempt from liability to tax under the provisions of the 2005 Act), to claim refund of the service] tax, wherever assessed and, collected by Revenue or remitted otherwise by the taxable service provider, inadvertently. Considered in the light of this analysis, the substituted provisions, of clause/sub-paragraph ‘C’ of Notification No.15/2009 cannot be inferred to have imposed any disability on the recipient of services consumed wholly within the SEZ, from seeking refund of service tax remitted on such transactions, by the providers of such services.”
It is also relevant to quote the provisions contained in Sec.26(1)(e) and Sec. 51 of the SEZ Act, 2005 as reproduced below:
“26(1)(e) : exemption from service tax under Chapter V of the Finance Act, 1994 (32 of 1994) on taxable services provided to a Developer or Unit to carry on the authorized operations in Special Economic Zone.
51. The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.”
7. 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.
3.18 Following the principle, we hold that the provisions of section 26 of Special Economic Zones Act, 2005 are conferred with a primacy that cannot be denied, diluted or denigrated owing to delay in devising a facilitative mechanism that was agreeable to Revenue. Disregard of parliamentary intent to levy a tax or exempt a tax cannot be brooked under any circumstance. A harmonious construction of the exemption notification 4/2004-ST dated 31st March 2004 that preceded the Special Economic Zones Act, 2005 with that Act must perforce be the facilitative mechanism in the absence of any other. A misconceived notion, as entertained by the lower authorities about that distinction between the corporate office address and the site address, should not be allowed to hold sway when confronted with the factual matrix of its exclusive existence in a Special Economic Zone; consequently, there can be no doubt that the services provided by M/s NSDL was for the authorized operations in a Special Economic Zone.
3.19 For the above reasons, the appeal is allowed and the appellant is entitled to refund of service tax as claimed by them.
(Operative part of the order pronounced in Court on 13.08.2015)
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