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2011 (5) TMI 1034 - DELHI HIGH COURTWhether the circular dated 03.04.2008, seeking to deny tax benefits to service provided outside the SEZ inconsistent with the provisions u/s 26(1)(e) of the SEZ Act specifically grants an exemption from service tax on taxable services provided to a Developer or Unit to carry on the authorized operations by the Developer and the Entrepreneur/Unit - HELD THAT:- In Godrej & Boyce Mfg. Co. Ltd. V. State of Maharashtra [2009 (2) TMI 856 - SUPREME COURT] the Apex Court held that circulars are administrative in nature and cannot alter the provisions of a statute nor can they impose additional conditions. A plain reading of the impugned circular makes it clear that only those services are exempted from service tax which are rendered to a Developer or a Unit/Entrepreneur within the SEZ. Thus, while the SEZ Act and the rules framed thereunder provide for tax exemption to all services provided to a Developer/ Entrepreneur operating in a SEZ but vide the impugned circular the Government has sought to prescribe an additional condition that the parent statute, which in the present case is the SEZ Act, 2005, does not prescribe. The impugned circular curtails the tax exemption granted to a service provider providing services to a Developer or a Unit/Entrepreneur operating in a SEZ to only those services that have been rendered within the SEZ, which in clear terms, is inconsistent with Section 26(1)(e) of the SEZ Act. Thus, applying the settled position of law to the facts and circumstances of the present case, I find that the impugned circular dated 03.04.2008 seeks to impose a condition that was not the intention of the legislature as expressed in the SEZ Act or in the SEZ Rules framed thereunder and thus, is liable to be set aside.
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