Neo Structo Construction Pvt Ltd VERSUS C.C.E. & S.T.-Surat-i

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.

  1. 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

  1. Shri Tara Prakash, learned Deputy Commissioner (AR) appearing on

behalf of the revenue reiterates the finding of the impugned order.

  1. 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

  1. 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:-

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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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