TMI Blog2023 (8) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived / carried out outside the SEZ zone. He has not found that the services were not used for authorized operations. Revenue has also not filed any appeal against the impugned order. The Hon ble Telangana High Court in the case of GMR AEROSPACE ENGINEERING LIMITED AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT] , while examining Notifications issued under Section 93 of the Finance Act, 1994 and the benefit of exemption flowing therefrom, has held Section 26(1) is a special power of exemption under a special enactment dealing with a unit in a special economic zone. Therefore, the notifications issued under Section 93 of the Finance Act, 1994 cannot be pressed into service for finding out whether a unit in a SEZ qualifies for exemption or not. The location of the SEZ unit of the appellant is in a remote area, due to which they had to employ migrant labourers who did not have accommodation to stay during the period of their employment with the appellant. For this reason, the appellant provided place of stay for such labourers and there is no dispute that such labourers were working with the SEZ unit of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEZ Act ), as per which the approval so granted was for carrying out authorized operations of manufacturing pneumatic tyres of rubber, tyre flaps and inner tubes of rubber. 2.3 It appears that there was an audit of the appellant s books of account by the Audit Team of the Service Tax Department during July 2018 and November 2018, during which various issues were pointed out and it is a matter of record that the appellant did file its reply to each of such issues pointed out during the course of audit. 3. It appears that not satisfied with the explanation, a Show Cause Notice dated 15.04.2019 was issued proposing inter alia to demand Service Tax along with interest and penalty. 4. It appears that the appellant filed its detailed reply dated 28.01.2020 countering all the allegations contained in the Show Cause Notice and also denying any Service Tax liability as proposed in the Show Cause Notice. 5.1 During adjudication, the Joint Commissioner, having considered the explanations filed by the appellant, appears to have dropped a major extent of the demand, but however, has sustained the demand to the extent of Rs.19,89,449/- along with interest and penalty. Vide Order-in-O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would rely on the decision of the Hon ble Delhi High Court in the case of M/s. Jindal Stainless Ltd. v. Union of India [2017 (51) S.T.R. 130 (Del.)] wherein it has been categorically held that exemption from Service Tax is available even if the services are consumed outside the SEZ so long as the services are used for authorized operations and that words cannot be added to the statute when there was no express requirement in the SEZ Act and the SEZ Rules that only services which are consumed within the SEZ would be exempted from payment of Service Tax. 9.5 Without prejudice to the above, the Ld. Advocate would submit that the requirement that services should be consumed within the SEZ, contained in the earlier Notifications, was superseded by the Notification in question i.e., Notification No. 12/2013 ibid., and therefore, the authorities have clearly erred in relying on the conditions prescribed in the earlier Notifications since the same were clearly non est as being superseded. 10. Per contra, Ld. Deputy Commissioner supported the findings of the lower authorities. He would also draw our attention to Section 26(1)(e) of the SEZ Act to contend that the exemption from Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able thereon. 2. The exemption shall be provided by way of refund of service tax paid on the specified services received by the SEZ Unit or the Developer and used for the authorised operations: Provided that where the specified services received by the SEZ Unit or the Developer are used exclusively for the authorised operations, the person liable to pay service tax has the option not to pay the service tax ab initio, subject to the conditions and procedure as stated below. 3. This exemption shall be given effect to in the following manner : (I) The SEZ Unit or the Developer shall get an approval by the Approval Committee of the list of the services as are required for the authorised operations (referred to as the specified services elsewhere in the notification) on which the SEZ Unit or Developer wish to claim exemption from service tax. (II) The ab initio exemption on the specified services received by the SEZ Unit or the Developer and used exclusively for the authorised operation shall be allowed subject to the following procedure and conditions, namely :- (a) the SEZ Unit or the Developer shall furnish a declaration in Form A-1, verified by the Sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause (a). (c) the SEZ Unit or Developer who is registered as an assessee under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder, or the said Act or the rules made thereunder, shall file the claim for refund to the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, the as the case may be, in Form A-4; (d) the amount indicated in the invoice, bill or, as the case may be, challan, on the basis of which this refund is being claimed, including the service tax payable thereon shall have been paid to the person liable to pay the service tax thereon, or as the case may be, the amount of service tax payable under reverse charge shall have been paid under the provisions of the said Act; (e) the claim for refund shall be filed within one year from the end of the month in which actual payment of service tax was made by such Developer or SEZ Unit to the registered service provider or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit; (f) the SEZ Unit or the Developer shall submit only one claim of refund under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one. Section 93 of the Finance Act, in that sense is a general power of exemption available in respect of all taxable services. But, Section 26(1) is a special power of exemption under a special enactment dealing with a unit in a special economic zone. Therefore, the notifications issued under Section 93 of the Finance Act, 1994 cannot be pressed into service for finding out whether a unit in a SEZ qualifies for exemption or not. 13.2 In the case of M/s. Norasia Container Lines v. Commissioner of Central Excise, New Delhi [2011 (23) S.T.R. 295 (Tribunal Delhi)], the Ld. co-ordinate Delhi Bench had an occasion to consider a more or less similar issue, but however in the context of Notification No. 04/2004-S.T. dated 31.03.2004 vis- -vis Section 26 ibid. After hearing the rival contentions, the Ld. Bench has held as under: - 5. It is clear from the above provision that there is no restriction regarding the consumption of the services and the exemption is extended to the services rendered to a unit in the SEZ for the purpose of authorised operation in the SEZ. 6. . 7. This Rule also states that exemption from service tax is available to services rendered to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. As regards item (a) above, the explanation of the appellant, as could be picked up from the documents placed on record, reveals that the same relates to the services procured for construction of toilets and repair and maintenance of school premises in the villages near their factory as part of their Corporate Social Responsibility (CSR) activity within the meaning of Section 135 of the Companies Act, 2013. We also find that works contract service, as undertaken above, has direct nexus with the activities of the appellant carried on in the SEZ inasmuch as the same is towards the fulfilment of CSR obligations. 16.1 We also find that the location of the SEZ unit of the appellant is in a remote area, due to which they had to employ migrant labourers who did not have accommodation to stay during the period of their employment with the appellant. For this reason, the appellant provided place of stay for such labourers and there is no dispute that such labourers were working with the SEZ unit of the appellant. Therefore, the appellant had to construct dormitory where such workers / employees could be accommodated. 16.2 The appellant has also taken a stand that CSR activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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