TMI Blog2019 (6) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... ard. Accordingly, as the refund application has been filed within the end of the quarter from one year, such delay should be condoned and consequential refund allowed. Refund claim - common input services - HELD THAT:- Services which are common in nature not exclusively used for authorized operation have to be dealt in a manner prescribed. Clause (a) of Paragraph III of the said Notification provides that the service tax paid on specified services that are common to the authorized operation in an SEZ and the operation is domestic Tariff Area (DTA units) shall be distributed amongst the SEZ unit and DTA units in the manner as prescribed in Rule 7 of Cenvat Credit Rules. Moreover, it further provides that for the purpose of distribution, the turnover of the SEZ unit shall be taken as the turnover of authorized operation during the relevant period - In the instant case, it is the argument of the Appellant s Counsel that they do not have any DTA units, however, they do have DTA operations wherein they are providing erection and commissioning service. Moreover, DTA sale undertaken by them forms part of authorized operation, in terms of provisions of SEZ Act. The turnover of DTA sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the appellant submits that the substantial requirement of the Notification for grant of refund is receipt of services by the SEZ Unit on payment of service tax. He also submits that as long as this requirement is met, other procedural deviations can be condoned as the procedure has been stated only to facilitate verification of substantive requirement . It is not in dispute that the services, which have been received by SEZ Unit for authorized operations and service tax has been paid thereon. The ld.Counsel further submits that Clause 3 (e) of Notification No.12/2013-ST dated 01.07.2013, provides that the Assistant Commissioner or the Deputy Commissioner of Central Excise, shall permit the appellant to file the application even beyond the period of limitation. Accordingly, the delay in filing of the refund claim, if any, should be considered by the authorities below. The ld.Counsel, however, submits that the Appellant Company has only one work and/or factory at the relevant period, which is located at Special Economic Zone, Sector 2, Falta, 24 Parganas (South), West Bengal-743504 and the Company has its registered office at Tobacco House, 4th Floor, 1 Old Court House Corn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deal with such scenario inter alia involving refund of overlapping period, Clause (e) of Paragraph III of the said Notification empowers the Assistant Commissioner/Deputy Commissioner to permit extended period of time for filling refund application. 6.4 It has been observed that the lower authority has not considered the extended period of time particularly in lieu of overlapping provisions arising out of conjoint reading of Clause (e) (f) of Paragraph III of the said Notification and disallowed the refund application on the ground of time barred, which is against the principal of natural justice. Moreover, there is no finding in the order of Adjudicating Authority or Appellate Authority that the service tax has not been paid to the service provider. The legislature requires no service tax to be charged to a SEZ unit and hence procedural provisions needs to be interpreted considering spirit and intensions of the legislature. 6.5 In the light of overlapping in the impugned Notification, I am of the view that the adjudicating authority has not considered such technical and practical aspects, nor is there a finding in this regard. Accordingly, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a service shall be treated as used exclusively for the authorized operation, if the service is received by the SEZ unit under an invoice in the name of such unit and the service is used only for furtherance of authorized operation of SEZ. 6.9 In the instant case, the Appellant had paid service tax of ₹ 8.82.495/- to the service providers raising invoices with the address of SEZ unit. Thus, in terms of explanation to Clause (e) of Paragraph III of the said Notification amended vide Notification Number 7/2014-ST dated 11.07.2014, the refund of service tax to the extent of said amount is exclusively for SEZ unit and used for authorized operation in SEZ. There is no dispute on this count from the end of Respondent. Summary of refund claimed during the second quarter is as follows : TABLE-A Particulars Note Amount (Rs.) Credit exclusively used for Authorized operations in SEZ Unit A 8,82,495/- Common Credit used for Authorized operations p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 2,54,50,18,122/- Total Turnover from Authorized operations D=B+C 3,97,67,03,391/- Total Turnover from Sale of Services E 9,63,78,901/- Total Turnover F=A+D+E 6,19,41,10,948/- 6.11 In the instant case, it is the argument of the Appellant s Counsel that they do not have any DTA units, however, they do have DTA operations wherein they are providing erection and commissioning service. Moreover, DTA sale undertaken by them forms part of authorized operation, in terms of provisions of SEZ Act. 6.12 As per Section 2(C) of the Special Economic Zone Act, 2005, the term authorized operation has been defined to mean operations which may be authorized under Sec-section (2) of Section 4 and sub-section (9) of Section 15 of the said Act. Further, on cogent reading of these provisions, authorized operation means operations which a development Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the appellant had claimed refund of ₹ 8,44,349/- out of total common input services tax of ₹ 9,41,175/- for the Quarter ended 30th September, 2014, based on total turnover of the company and turnover of SEZ unit. The proportion carried out by the Appellant is in consonance to the provisions of Rule 7 of the CCR. 6.16 As the Appellant had already made proportionate amount as per the provisions of Rule 7 of Cenvat Credit Rules , 2004 and thereafter, claimed refund of applicable portion, it transpires that the Appellant had not claimed refund of service tax paid in proportionate to the DTA operation and hence it is as per the Clause (a) of Paragraph III of the said Notification. 7. I also observe that the present dispute has been settled by the judgement of the Hon ble Supreme Court in Civil Appeal No.3327 of 2007 in the case of Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar and Company and Others reported in 2018 TIOL 302 SCCUS- CB. The relevant observations of the said judgement are reproduced below : 38. We will now consider another Constitution Bench decision in Commissioner of Central Excise, New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itude can be shown, if there is failure to comply with some requirements which are directory in nature, the noncompliance of which would not affect the essence or substance of the notification granting exemption. 39. The Constitution Bench then considered the doctrine of substantial compliance and intended use . The relevant portions of the observations in paras 31 to 34 are in the following terms - 31. Of course, some of the provisions of an exemption notification may be directory in nature and some are mandatory in nature. A distinction between the provisions of a statute which are of substantive character and were built in with certain specific objectives of policy, on the one hand, and those which are merely procedural and technical in there nature, on the other, must be kept clearly distinguished Doctrine of substantial compliance and intended use 32. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably be expected of it, but failed or faulted in some minor or inconsequent aspects whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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