SRF Limited Vs Commissioner of Customs (CESTAT Delhi)
The appeals before CESTAT Delhi concerned partial rejection of service tax refund claims filed by an SEZ unit in respect of various input services used for authorised operations. The refund claims, covering different periods from July 2012 to March 2016, were filed under service tax exemption notifications. The original authority and the Commissioner (Appeals) rejected refunds on several grounds, including non-approval of services by the Unit Approval Committee (UAC), claims based on Input Service Distributor (ISD) invoices, warehousing charges, outward Goods Transport Agency (GTA) services, invoice-related deficiencies, and procedural requirements relating to filing of refund claims.
The Tribunal identified the principal issue as whether the appellant was entitled to refund of service tax paid on input services used for authorised operations in the SEZ, notwithstanding alleged non-compliance with conditions contained in service tax exemption notifications.
The Tribunal examined the scheme of the Special Economic Zones Act, 2005 and observed that Section 26(1)(e) grants exemption from service tax on taxable services provided to a Developer or Unit for carrying on authorised operations in a Special Economic Zone. Section 51 gives overriding effect to the SEZ Act over inconsistent provisions of other laws, while Rules 22 and 31 of the SEZ Rules prescribe the manner and conditions for availing such exemption. The Tribunal held that “prescribed” under Section 26(2) refers only to rules framed under the SEZ Act.
