SMTT Holidays Vs Commissioner of GST & Central Excise (CESTAT Chennai)
In SMTT Holidays Vs Commissioner of GST & Central Excise, the CESTAT Chennai examined whether service tax was payable on hire charges collected by the appellant for providing transportation services to an SEZ unit. The appellant, registered as a provider of Tour Operator services, had provided cars on hire for transportation of staff to M/s Computer Science Corporation of India (P) Ltd., located in MEPZ-SEZ, during the period from May 2008 to April 2011. During audit, the Department alleged that service tax had not been paid on these hire charges and issued a show cause notice invoking the extended period of limitation. The adjudicating authority confirmed the demand along with interest and imposed penalties under Sections 77 and 78 of the Finance Act, 1994, which was later upheld by the appellate authority.
Before the Tribunal, the appellant contended that the Department had wrongly interpreted Notification No. 04/2004-ST by assuming that services must be physically rendered entirely within the geographical boundaries of the SEZ to qualify for exemption. It was argued that the SEZ Act, 2005 is a special legislation having overriding effect under Section 51 and that Section 26(1)(e) grants exemption from service tax on taxable services provided to SEZ units for authorised operations, irrespective of the place where services are rendered. The appellant further submitted that transportation of employees was intrinsically connected with authorised operations of the SEZ unit.
