Case Law Details
C.S.T. Service Tax Vs Adani Power Ltd (CESTAT Ahmedabad)
As regard the question relating to the power of remand of the Commissioner (Appeals), it has been pleaded that in view of the observations of the Supreme Court in the case of MIL India Ltd. v. Commissioner of Central Excise, reported in 2007 (210) E.L.T. 188, the power of remand by the Commissioner (Appeals) had been taken away by amending the relevant provisions in Section 35(A) of the Central Excise Act,1944 /Section 128A (3) of the Customs Act, 1962 w.e.f. 11-5-2001. Two judgments of Punjab & Haryana High Court in the cases of Commissioner of Customs, Amritsar v. Enkay (India) Rubber Co. Pvt. Ltd., reported in 2008 (224) E.L.T. 393 and Commissioner of Central Excise, Jalandhar v. B.C. Kataria, reported in 2008 (221) E.L.T. 508, were also cited on behalf of the Revenue. On the other hand, the counsel for the respondent relied upon the judgment of CESTAT passed in their own case reported in 2016(44) STR146(T) and theHon’ble Gujrat High Court decision in the matterofCommissioner of Service tax Vs. Associated Hotels Ltd. – 2015 (37)STR723 (Guj) supra. We also observe that the Gujarat High Court in the case of Medico Labs, as reported in 2004 (173) E.L.T. 117,by relying the Supreme Court’s ruling in the case of Union of India v. Umesh Dhaimode, reported in 1998 (98) E.L.T. 584, wherein the jurisdictional High Court has taken the view that the power of remand is still available with the Commissioner (Appeals).
The apparent conflict between the two Supreme Court rulings in the cases of Umesh Dhaimode and MIL had been examined by the Tribunal in several decisions. In the cases of Commissioner of Central Excise v. Prem Steels P Ltd., reported in 2012-TIOL-1317-CESTAT-DEL,Commissioner of Central Excise v. Singh Alloys (P) Ltd., reported in 2012 (284) E.L.T. 97, and Commissioner of Central Excise v. Vikram Dhawan, reported in 2012 (284) E.L.T. 554, held that the observations in MIL India‟s case are in the nature of passing remarks which cannot take proceedings over specific analysis of the relevant provisions and the findings thereon of the Supreme Court in the case of Umesh Dhaimode. The judgment of the Gujarat High Court in the case of Medico Labs was also taken note of and it has been held that the Commissioner (Appeals) still holds the power to remand matters.
In the present case, the observation made by the Commissioner (Appeals) in Para XXII,XXIII, II, XII, XXXVIII mentioned in the part (D) of discussion and finding of impugned OIA cannot be regarded as amounting to a remand. In the present case, the directions given by the Commissioner (Appeals) for re-verifying a few aspects related to refund cannot be considered as amounting to a remand to the lower authority. These directions should have amounted to remand, if any, of the issues in dispute had been left unresolved by the Commissioner (Appeals) and sent back to the lower authority for a fresh decision or adjudication. This has not happened in the present case as all the issues raised by the Lower Authority in the adjudication order have been decided conclusively by the Commissioner (Appeals) as is evident from impugned Order-In-Appeal. In these circumstances, we do not find any merit in the Revenue‟s appeal in this regard.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The Revenue is in appeal against impugned Order-In-Appeal No. 09/2013(STC)SKS/ Commr(A)Ahd dated 11.01.2013 wherein, refund of service tax paid on the services utilized in SEZ for authorized operations in some of the services was allowed and in some the services allowed by way of remand to adjudicating authority.
1.1 The facts of the case are that the respondent was permitted vide letter dated 19.12.2006 issued by Development Commissioner, Kandla Special Economic Zone, Kandla for “Authorized Operation” viz. develop and setting up of a Special Economic Zone for Power Sector. They submitted approved list of specified services for authorized operations issued by Development Commissioner, Kandla Special Economic Zone Kandla vide letter dated 26.06.2009. Respondent filed refund claim in respect of such input service under Notification No. 9/2009-S.T. as amended by Notification No. 15/2009-S.T., dated 20-5-2009. The adjudicating authority sanctioned the refund claim partly while rejecting the major part. Being aggrieved by the order-in-original, the appellant filed appeal before the Commissioner (Appeals), who vide impugned order disallowed the refund of service tax on some of the services, allowed the refund of service tax on some of the services and allowed the refund of service tax on some of services by way of remand to adjudicating authority. Being aggrieved by the impugned order the revenue filed this appeal to the extent of allowing appeal by way of remand as well as allowing refund claim amount.
02. Shri J.A.Patel, Learned Superintendent (Authorized Representative) appearing on behalf of the appellant reiterates the grounds of appeal filed by the revenue. The learned AR would draw our attention to the amended provisions of Section 35(A) of the Central Excise Act, 1944 w.e.f. 11.05.2001. The new section read as “Commissioner (Appeals) shall, after making such further enquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against.”He submits that Commissioner (Appeals) has been authorised to act as an adjudicating authority and pass necessary orders if it found that the original adjudicating authority has passed the order which is not legal and proper by calling for the adjudication proceedings records and re-examine the issue a fresh/suo moto. The Commissioner (Appeals) has been given power to issue an order after ascertaining the facts at his end which earlier were used to be done by the original adjudicating authority by way of remand directions. In the present matter Commissioner (Appeals) has failed to adhere to judicial discipline by directing the Assistant Commissioner/ Deputy Commissioner to decide the matter without finally deciding on his own. Having failed to do so, the order so passed by Commissioner (Appeals) is against the settled law and Board’s Instruction issued vide No. 275/34/2006-CX.8A dated 18.02.2010. He placed reliance on the decisions passed in the matter of M/s MIL India Ltd. [2007(210) ELT188 (S.C.), M/s Enkay (India) Rubber Co. Pvt. Ltd. [2008(224) ELT393 (P&H) and M/s B.C. Kataria [2008(221) ELT508 (P&H)].
2.1 He further submits that Commissioner (Appeals) has erred by allowing the refund of Service tax, on the service provided by various service providers under the categories of „Legal Consultancy Service’, Commercial Coaching and Training Service‟. The respondent has claimed the refund of service tax , declaring the services under the categories „Banking and other Financial Services , Erection, Commissioning and Installation Service, Business Support Service, Consulting Engineering Service, information Technology Service, Management or Business Consultant service, Technical Testing and Analysis Service. The above services provided by the service providers were not specified services, as the said services were not included in the approved list of specified services for authorized operations. The respondent has wrongly classified the services under the categories other than the actual services provided by the service providers. The services provided by the service providers were not included in approval list; hence the respondent has declared such services under the categories, which were included in the approval list. They applied for approval of list of services under Notification No. 09/2009-ST dated 03.03.2009 as amended by Notification No. 15/2009-ST dated 20.05.2009. The said services were approved by the approval committee vide letter dated 20.06.2009. The respondent had again applied for the additional services on 14.10.2011, which were approved. The Commissioner (Appeals) has observed that now the services provided by the service providers are included in the approval list, the delay is of procedure infraction for which substantial benefit of refund cannot be denied as has allowed the refund. The specified services in dispute were approved by the approval committee on 24.05.2012 only whereas the refund claim pertains to January 2011 to February 2011. The conditions of the Notification are to be strictly followed. The Commissioner (Appeals) has erred in as much as he has considered the issue as procedural lapse.
2.2 He further submits that Learned Commissioner (Appeals) has erred while allowing the refund in respect of services viz., training the staff. The claimant has claimed the refund under the category „Chartered Accountancy Services‟. The above services are not in the nature of said service, but can appropriately be classified under „Commercial Training and Coaching Service and said service were not approved services. The repairing Service provided at Ahmedabad i.e. outside SEZ. They claim refund of service tax on various services viz. Business Exhibition Service, Erection, Commissioning and Installation Service, Manpower Supply Service, Information Technology Software Service, Renting of Immovable Property Service, Maintenance or repair service, Rent-a-Cab Services etc. The above services were not consumed in relation to authorized operation of the SEZ. The Commissioner (Appeals) has allowed the refund of service tax on the above services by holding that the adjudicating authority has already accepted that the above services were consumed in relation to the authorized operations. The Commissioner (Appeals) has erred as the adjudicating authority has categorically observed that the claimant has failed to establish that the above services were not consumed in relation to the authorized operations in SEZ. The commissioner (Appeals) has erred by ignoring the procedural lapses viz, incorrect address, incomplete address, address not mentioned.
03. On the other hand, Learned Counsel Shri Hardik Modh, appearing for the Respondent submits that the Commissioner (Appeals) does have power to remand the matter to the adjudicating authority, the said issue is no more res integra. In their own case on the identical facts of the different period the said issue is decided by the Hon‟ble Tribunal in M/s Adani Power Ltd. Vs Commissioner of Service tax, Ahmedabad 2016(44) S.T.R. 146 (Tri.-Ahmd.). He also relied on the decision of Commissioner of Central Excise & ST Vs. Adani Power Ltd. 2020(3) TMI 810.
3.1 Further, he reiterates the findings of the impugned order and argued that after considering the issue in details Learned Commissioner (Appeals) passed the impugned order and allowed the refund claim on services used in authorised operation.
3.2 In respect of refund claim on Chartered Account Service, he submits that Ld. Commissioner (Appeals) allowed the refund claim on the premise that service provider registered under the category of Chartered Accountant Service and raised the bill under the category of Chartered Accountants which was approved service in the Approval list of authorised operation in SEZ. The Appellant challenged that said service is not covered under the category of “Chartered Accountants Services”. It is settled law that classification of service cannot be doubted at the end of service recipient. As regard the repair service, he submits that merely sending the material outside for repair, does not mean that services has not been consumed with SEZ. As regard the ground of Appellant that refund cannot be allowed on procedural lapse, he submits that it is admitted facts that services had been used in relation to authorised activity, hence Ld. Commissioner (Appeals) rightly granted refund.
04. We have carefully considered the submissions made by both the sides and perused the records. The grievance of the Revenue in the present appeal is twofold :
(i) that the Commissioner (Appeals) has erred in remanding the matter back to the lower authorities even though the Commissioner (Appeals) has got no power to remand the case to the lower authority after the amendment made in the relevant Section w.e.f.11.05.2001 statute did not confer any power of remand upon the Commissioner (Appeals).
(ii) that the Commissioner (Appeals) has erred by allowing the refund of Service tax on services which were not specified services for authorised operations.
4.1 As regard the question relating to the power of remand of the Commissioner (Appeals), it has been pleaded that in view of the observations of the Supreme Court in the case of MIL India Ltd. v. Commissioner of Central Excise, reported in 2007 (210) E.L.T. 188, the power of remand by the Commissioner (Appeals) had been taken away by amending the relevant provisions in Section 35(A) of the Central Excise Act,1944 /Section 128A (3) of the Customs Act, 1962 w.e.f. 11-5-2001. Two judgments of Punjab & Haryana High Court in the cases of Commissioner of Customs, Amritsar v. Enkay (India) Rubber Co. Pvt. Ltd., reported in 2008 (224) E.L.T. 393 and Commissioner of Central Excise, Jalandhar v. B.C. Kataria, reported in 2008 (221) E.L.T. 508, were also cited on behalf of the Revenue. On the other hand, the counsel for the respondent relied upon the judgment of CESTAT passed in their own case reported in 2016(44) STR146(T) and theHon’ble Gujrat High Court decision in the matterofCommissioner of Service tax Vs. Associated Hotels Ltd. – 2015 (37)STR723 (Guj) supra. We also observe that the Gujarat High Court in the case of Medico Labs, as reported in 2004 (173) E.L.T. 117,by relying the Supreme Court’s ruling in the case of Union of India v. Umesh Dhaimode, reported in 1998 (98) E.L.T. 584, wherein the jurisdictional High Court has taken the view that the power of remand is still available with the Commissioner (Appeals).
4.2 The apparent conflict between the two Supreme Court rulings in the cases of Umesh Dhaimode and MIL had been examined by the Tribunal in several decisions. In the cases of Commissioner of Central Excise v. Prem Steels P Ltd., reported in 2012-TIOL-1317-CESTAT-DEL,Commissioner of Central Excise v. Singh Alloys (P) Ltd., reported in 2012 (284) E.L.T. 97, and Commissioner of Central Excise v. Vikram Dhawan, reported in 2012 (284) E.L.T. 554, held that the observations in MIL India‟s case are in the nature of passing remarks which cannot take proceedings over specific analysis of the relevant provisions and the findings thereon of the Supreme Court in the case of Umesh Dhaimode. The judgment of the Gujarat High Court in the case of Medico Labs was also taken note of and it has been held that the Commissioner (Appeals) still holds the power to remand matters.
4.3 In the present case, the observation made by the Commissioner (Appeals) in Para XXII,XXIII, II, XII, XXXVIII mentioned in the part (D) of discussion and finding of impugned OIA cannot be regarded as amounting to a remand. In the present case, the directions given by the Commissioner (Appeals) for re-verifying a few aspects related to refund cannot be considered as amounting to a remand to the lower authority. These directions should have amounted to remand, if any, of the issues in dispute had been left unresolved by the Commissioner (Appeals) and sent back to the lower authority for a fresh decision or adjudication. This has not happened in the present case as all the issues raised by the Lower Authority in the adjudication order have been decided conclusively by the Commissioner (Appeals) as is evident from impugned Order-In-Appeal. In these circumstances, we do not find any merit in the Revenue‟s appeal in this regard.
4.4 As regard the second issue, we note that Learned Commissioner (Appeals) has given his finding on all the issues involved and for the sake of ready reference, we reproduce the relevant paragraphs from the impugned order-in-appeal below: –
“ I find that all such services which are approved as specified service by the approval committee are considered as related to the authorized operation as per Notification No. 09/2009-ST dated 03.03.2009 as amended Notification No. 15/2009-ST dated 20.05.2009.
I find that the appellant had filed the claim on 25.04.2011 wherein they had claimed the refund of Service tax paid on services availed during the period 01.01.2011 to 28.02.2011 and the said services were utilized for authorized operation in SEZ. The Appellant had applied for the approval list of Services, under Notification No. 09/2009-ST dated 03.03.2009 amended by Notification No. 15/2009-ST dated 20.05.2009., which were approved by the approval committee vide their letter F.No. MPSEZ/P&C/5/74/06 Vol-I dtd. 26.06.2009. The Appellant had again applied for the additional service to be included in the approved list of default services on 14.10.2011 which were also approved by the Committee vide their letter F.No. MPSEZ/P&C/5/7/74/06 Vol-II/57 dtd. 24.05.2012 submitted by the Appellant.
I find that rejection was on account of reason that above mentioned 2 services were not approved as specified services by the approval committee. Now, the appellant has produced along with letter F.No. MPSEZ/P&C/5/74/06 Vol-II/57 dtd. 24.05.2012 having another list of approved services, which these 2 services (under dispute) have been clearly mentioned as specified services.
I observe that the said notifications only prescribed the condition that refund of service tax should be eligible to SEZ for those services which have been approved by the approval committee and it does not stipulate the condition that refund will be entitled only from the date when approval committee approves the services. In this case the appellant has applied and got the approval from the approval committee for additional services to be included in the approval list (from KASEZ) on 24.02.2012. Hence, the period of claim for refund of Service tax on the said services which utilized in authorized operation viz., „Legal Consultancy Service‘ and „Commercial Training and Coaching Services would remain as one of the specified services, as defined under the clause of said notification. I conclude that the additional two services (in dispute) were approved by the approval committee on 24.05.2012 thus making them as one of the specified services which were used in the authorized operations by the Appellant in SEZ Hence, I find that this delay as the procedural infraction on the part of the Appellant for which the substantive benefit of refund cannot be denied to them”
4.5 We find that there is no dispute in the present matter that the said services have been used by the respondent for authorized operation in the SEZ. Further, we find that not mentioning the said services in the Approved List is only a technical defect and it should not debar the substantive benefit to the assessee who has utilized those services for carrying out authorized operation. we also note that disputed input services have been subsequently approved by the Committee in the approval List of services. This issue has been considered by the Tribunal in number of cases and in the case of Commissioner of Central Excise Mangalore Commissionerate v. Mangalore SEZ Ltd.2017 (49) S.T.R. 311 (Tri. – Bang.) supra, the CESTAT has held as under :
“The Government‘s intention is clear that the SEZ units should either not require to pay or if paid they are eligible for refund. Mere not mentioning the services in Annexures II & III is only a technical one which should not debar the substantial benefit. In this case, it is clear that the appellant who had availed the services inside the SEZ were not liable to pay service tax and the appellant who had paid the Service Tax for the services availed within SEZ should not be penalized for the same. Therefore, denying the eligible refund to the appellant on the ground that services availed by the appellant were not listed in the annexures II & III is not justified. Therefore, I am inclined to allow the refund in respect of the above services. The amendment to the Notification No. 9/2009 by Notification No. 1/2009 was beneficial in nature so that the units do not have to first pay the service tax and then come forward for refund if entire services were wholly consumed with procedural prescriptions of Notification No. 09/2009-ST dated 03.03.2009 or 15/2009. These Notifications are calibrated to enable recip.
Further, in the case of Intas Pharma Ltd. v. CST, Ahmedabad2013 (32) S.T.R. 543 (Tri. – Ahmd.) supra CESTAT has held as under :
“On true and fair construction of Notifications No. 9/2009 and 15/2009 issued under Section 93(1) of the Act, considered in the light of the overarching provisions of Sections 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 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.”
The said decision of Intas Pharma has been followed by the CESTAT Mumbai in the case of Reliance Industries Ltd. v. CCE, Mumbai-I-,2016 (41) S.T.R. 465 (Tri. – Mumbai),
4.6 In view of various decisions cited supra squarely covering the issue in favour of the respondent, we therefore find no merit in Revenue’s argument.
4.7 As regard the refund in respect of „Chartered Accountancy Service’ the Learned Commissioner (Appeals) in his order observed that service provider registered with the service tax department under „Chartered Accountancy Service’ and they raised the bills under the said category which is approved service in specified list for authorized operation in SEZ, hence refund is allowable. The contention of Revenue that the said service provided by Chartered Accountant does not fall under the category of “Chartered Accountants Service”, cannot be doubted at the end of service recipient and benefit of refund cannot be denied on this ground to the respondent.
4.8 The Revenue disputed the refund on repair service on the ground that the pump was sent at Ahmedabad at vendor’s premises. The services were provided at Ahmedabad, which is situated outside the SEZ. The refund is available for the services used within SEZ and not outside SEZ. We find that there is no dispute by the revenue that the impugned services of repair were used by the appellant in relation to the authorized operation and also covered under the approved list. When there is no dispute about the use of the said services in authorized operation, the question of rejecting the refund claim in itself is incorrect.
4.9 As regard the contention of revenue that Commissioner (Appeals) has erred by ignoring the procedural lapses viz. incorrect address, incomplete address, address not mentioned. In Some case the service provider mentioned the address of Sambhav Building. As per the condition of the Notification, the service should be utilized within SEZ, hence the address of SEZ is mandatory requirement. Hence such services cannot be considered as utilized in relation to authorized operation. On perusal of the impugned order, We find that the Commissioner (Appeals) after going through the impugned Order-in-Original has passed a detailed order and thereafter set aside the Order-in-Original. Here, it is pertinent to reproduce Paragraph of the impugned order wherein the learned Commissioner (Appeals) has observed as under:
“ I find that the adjudicating authority has already accepted that “ the service rendered by the above service provider, the services under discussion are consumed in relation to the authorized operation of the SEZ and not consumed within the SEZ; that the said invoices mentioned here above are entitled for refund on merit.” In view of above, I find that the adjudicating authority is agreed that services were specified under the approval list, the services used in relation to the authorized operation and service tax was paid. Further, the adjudicating authority also accepted that the refund is admissible but address in not correct, full address not mentioned and only appellant name is mentioned on the face of invoice/ challan, hence refund was rejected. I held that the appellant has broadly fulfilled the conditions of the notification hence; the reason as given by the adjudicating authority are not sustainable and merely minor technical defaults, which cannot debar someone from their eligibility for any exemption and any benefit. Hence refund is allowed in the cases -. “
05. After considering the submission and records and the facts on record, we do not find any infirmity in the impugned order passed by the Commissioner (Appeals) and, therefore, we uphold the same. Accordingly the appeal of the Revenue is dismissed.
(Pronounced in the open court on 15.03.2022 )
