Service Tax Appeal No.11082 of 2013
(Arising out of OIA-CCEA-SRT-I-SSP-306-2012-13-U-S dated 06/02/2013 passed by
Commissioner of Central Excise, Customs and Service Tax-SURAT-I)
Neo Structo Construction Pvt Ltd
VERSUS
C.C.E. & S.T.-Surat-i
APPEARANCE:
Shri Jigar Shah & Shri Amber Kumarawat, (Advocates) for the Appellant
Shri Tara Prakash, Deputy Commissioner (AR) for the Respondent
CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR
HON’BLE MEMBER (TECHNICAL), MR. RAJU
Final Order No. A/ 10239 /2023
DATE OF HEARING: 20.01.2023
DATE OF DECISION: 07.02.2023
RAMESH NAIR
The brief facts of the case are that the appellant are interalia engaged
in providing taxable services in category of Erection commissioning service,
construction services, maintenance and repair service, manpower
recruitment and supply service, supply of tangible goods service and goods
transport agency service. The appellant have provided services to various
clients and some of them are situated in SEZ also. They entered into an
agreement with M/s. Reliance Petroleum Limited, a unit situated in SEZ for
providing services which were to be consumed within SEZ. They availed the
exemption under notification no. 4/2004-ST, the said notification was
amended by notification no.9/2009-ST dated 03.03.2009 and it was further
amended by way of a substitution vide notification no.15/2009-ST. On
scrutiny of ST-3 returns filed by the appellant, it was noticed that the
appellant had shown certain receipts for exempted services under erection
commissioning and installation service, further details were called for from
the appellant vide letter dated 12.08.2010. On furnishing all the details, a
show cause notice came to be issued for the period 03.03.2009 and
20.05.2009 wherein, it was proposed to demand service tax for the service
provided to SEZ for the service wholly consumed within their SEZ. It was
also proposed to demand interest and to impose penalties. The said show
cause notice was adjudicated vide Order-in-Original 37/ADJ/ADC-BA/D/11-
12 dated 31.10.2011 whereby, the demand of Rs.27,63,672/- with interest
under Section 75 was confirmed and also imposed the penalty under Section
76 & 77. Being aggrieved by the Order-In-Original, the appellant filed appeal
before the Commissioner (Appeals) who upheld the Order-In-Original
therefore, the present appeal filed before us.
- Shri Jigar Shah with Shri Ambar Kumarawat, learned counsels
appearing on behalf of the appellant at the outset submits that notification
no.4/2004-ST was superseded vide notification no.9/2009-ST dated
03.03.2009 whereby, the exemption was granted by way of refund after
payment of service tax in relation to specified services. He submits that on
this basis, the revenue has contended that the appellant was supposed to
pay service tax first and thereafter, should have claimed the refund. It is his
submission that this notification was further amended by way of substitution
vide notification no.15/2009-ST dated 20.05.2009 wherein, it was provided
that the service provided is exempted subject to the service provided by
them was wholly consumed within the SEZ. He submits that there is no
dispute that the entire service was wholly consumed within SEZ. The
notification no.15/2009-ST dated 20.05.2009 being issued by substituting
the earlier provision, the same shall have retrospective effect therefore, the
supply of service of the appellant is covered by exemption notification
no.9/2009-ST dated 03.03.2009 as amended by notification no.15/2009-ST
dated 20.05.2009. He also relied upon the circular no.114/08/2009-ST dated
20.05.2009. Alternatively, he submits that even if it is assumed that there is
no exemption notification for the service provided by the appellant, the same
shall not be taxable on the ground that SEZ Act provides that any supply of
goods and service to SEZ shall not be charged to duty. Since the SEZ Act
over rides all other acts by virtue of SEZ Act itself, the supply of services to
SEZ unit/developer will not be taxable. In support of his submission, he
placed reliance on the following judgments:-
SRF LIMITED- 2023 (4) TMI 989-CESTAT-New Delhi
COGNIZANT TECHNOLOGY SOLUTIONS INDIA PVT. LTD.- 2021 (10)
TMI 642
RELIANCE JAMNAGAR INFRASTRUCTURE LIMITED- 2022 (1) TMI 1278
CUMMINS TECHNOLOGY SOLUTIONS INDIA PVT. LTD.- 2020 (9) TMI
388-CESTAT-New Delhi
SANGHVI MOVERS LTD.- 2018 (10) TMI 90
- Shri Tara Prakash, learned Deputy Commissioner (AR) appearing on
behalf of the revenue reiterates the finding of the impugned order.
- We have carefully considered the submissions made by both the sides
and perused the records. We find that the appellant have provided the
services to SEZ during the period 03.03.2009 to 20.05.2009, during the said
period the exemption to service provided to SEZ was available under
notification no. 9/2009-ST which was by way of refund however,
subsequently notification no.15/2009-ST dated 20.05.2009 was issued
amending the notification no.9/2009-ST wherin, sub-para (c) of para 1 of
the notification no.9/2009-ST was substituted. For ease of reference, the
said notification is reproduced below:-
Exemption to taxable services provided to a developer or unit of Special
Economic Zone – Notification No. 9/2009-S.T., amended
In exercise of the powers conferred by sub-section (1) of section 93 of the
Finance Act, 1994 (32 of 1994), the Central Government hereby makes
the following further amendments in the notification of the Government of
India in the Ministry of Finance (Department of Revenue) No. 9/2009-
Service Tax, dated the 3rd March, 2009 which was published in the
Gazette of India, Extraordinary, Part II, Section 3, Sub-section () vide
number G.S.R. 146(E), dated the 3rd March, 2009, namely:-
In the said notification,
(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) after sub-paragraph (f), the following sub-paragraph shall be inserted,
namely:
“(g) the developer or unit of a Special Economic Zone shall maintain
proper account of receipt and utilisation of the taxable services for which
exemption is claimed.”
(B) in paragraph 2, for the words, “shall be subject to the following
conditions”, the words, except for services consumed wholly within the
Special Economic Zone, shall be subject to the following conditions” shall
be substituted.
From the above amendment, it can be seen that the amendment is explicitly
by way of substitution of sub-para (c) in the notification no.9/2009-ST. It is
settled law that if any amendment is brought whereby, the earlier terms of
the notification is substituted then, such amendment shall be effective from
retrospective effect i.e. from the date of original notification accordingly, for
the services provided during the period 03.03.2009 to 20.05.2009
substituted sub-para (c) shall apply. As per the sub-para (c) of notification
- 15/2009-ST., if the service provided is for use in authorized operations
in the SEZ shall be exempted without opting for the refund by the service
provider subject to the condition the services are consumed wholly within
the SEZ. In the present case, the service of erection, commissioning and
installation is indeed used and wholly consumed in the SEZ therefore, the
appellant is eligible for exemption under notification no.9/2009-ST as
amended by notification no.15/2009-ST dated 20.05.2009.
4.1 Without prejudice to the above, we also find that even as per SEZ Act,
all the supplies of goods and services made to SEZ are not chargeable to
duty or service tax. For this reason also, the demand is not sustainable. This
view was also taken in the judgment cited by the appellant in the case of
RELIANCE JAMNAGAR INFRASTRUCTURE LIMITED (supra) wherein, the
tribunal had made the following observations:-
- We have carefully considered the submissions made by both the
sides and perused the record. We find that refund of Rs. 77,669/- in
Appeal No. ST/447/2012 was rejected on the ground that
construction service was received wholly within the SEZ therefore
refund is not governed by Notification No. 09/2009-ST. The
contention of the Revenue is that since the service tax which was not
payable and if paid, the same cannot be refunded under Notification
No. 09/2009.
We find that once it is admitted that service tax payable on the
service received and consumed within SEZ, the same is not taxable
and the same is to be refunded even without applying Notification
No. 09/2009.
- As regards CHA Service, under Appeal No. ST/448/2012, refund of
Rs. 1,82,928/- was rejected on the ground that it is not CHA service
as the invoice shows various costs such as salaries and other
expenses. We find that even though total service charge of CHA was
bifurcated under different heads but the fact remains that service
was provided by CHA towards CHA service only. Therefore, merely
because the invoice is for amount towards various expenses but the
same were in relation to CHA service by the CHA, hence, the refund
cannot be rejected.
- As regards refund of Rs. 5,548/- for the construction service
received from Jay Khodiyar in relation to construction of trenching
and pipelines, we find that the construction was exclusively for SEZ
only. It is very obvious that a part of the same will be outside the
premises of the SEZ but that does not mean that service was
received for other than authorised operations of SEZ. Accordingly, on
the admitted fact that trenching pipeline installed partly in SEZ and
partly outside but for use in operation of the SEZ is admissible and
the refund of the same is clearly admissible.
- As per our above observation and discussions the appellant are
entitled for the refund. Accordingly, the impugned orders are set
aside and the appeals are allowed with consequential relief.
- As per our above discussion and finding, the demand of service tax in
respect of services provided to authorized operation of SEZ is not
sustainable accordingly, the impugned order is set aside. Appeal is allowed.
(Pronounced in the open court on 07.02.2023 )
(RAMESH NAIR)
MEMBER (JUDICIAL)
(RAJU)
MEMBER (TECHNICAL)
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