2010 (6) TMI 543 - Commissioner - Service Tax

Refund - Banking and Other Financial Services - the provisions of the SEZ Act have an overriding effect over the provisions of all other enactments and by virtue of this provision the wider exemption available under Section 26(1)(e) ought to have been granted to them - Notification No. 4/2004-S.T. dated 31-3-04 had been amended by Notification No. 09/2009-S.T. dated 3-3-2009 cited by the Appellant exempting taxable services whether or not the said taxable services are provided inside the Special Economic Zone from the whole of the service tax leviable thereon under Section 66 of the said Finance Act - The Appellant therefore is neither eligible for the benefit of the exemption under the said Notification No. 4/2004-S.T. dated 31-3-04 nor the amending Notification No. 09/2009-S.T. dated 3-3-2009 as further amended and therefore not eligible for the refund of service tax paid by them to NSDL - Appeal is rejected

Summary

Issues:
1. Refund claim rejection based on service tax paid by the Appellant to NSDL for banking and financial services.
2. Interpretation of SEZ Act, 2005 and Notification No. 4/2004-Service Tax.
3. Applicability of exemptions under SEZ Act and Notification No. 4/2004-Service Tax.
4. Eligibility for exemption and refund of service tax paid.

Analysis:
1. The appeal was filed against the rejection of a refund claim by the Appellant, M/s. Reliance Petroleum Ltd., concerning service tax paid to NSDL for banking and financial services. The Appellant contended that being a unit in the SEZ, they were entitled to procure services without payment of service tax, leading to the refund claim. A Show Cause Notice was issued, and the Respondent rejected the claim based on the services not being consumed within the SEZ, as per Notification No. 4/2004 dated 31-3-04.

2. The key issue revolved around the interpretation of the SEZ Act, 2005 and Notification No. 4/2004-Service Tax. The Appellant argued that their services from NSDL were for raising funds for their SEZ unit and hence exempt from service tax under Section 26(1)(e) of the SEZ Act, 2005. They emphasized that the SEZ Act had an overriding effect over other enactments, and the wider exemption should apply to them.

3. The findings highlighted the provisions of Section 26(1)(e) of the SEZ Act, 2005, and Notification No. 4/2004-S.T., dated 31-3-04, which exempted taxable services consumed within the SEZ. The Appellant's services from NSDL were deemed to be consumed at their corporate office in Mumbai, not within the SEZ, making them ineligible for the exemption. The amendments in Notification No. 09/2009-S.T. and No. 15/2009-S.T. did not apply retroactively to the Appellant's case, further denying their refund claim.

4. Ultimately, the Commissioner upheld the Order-in-Original, rejecting the appeal and stating that the Appellant was not eligible for the refund of service tax paid to NSDL. The decision was based on the lack of eligibility for exemptions under the SEZ Act and Notification No. 4/2004-Service Tax, as the services were not consumed within the SEZ, leading to the dismissal of the appeal.