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2020 (11) TMI 35 - CESTAT NEW DELHIExemption from service tax on the services rendered to the SEZ units - Receipt of Rent from SEZ units - demand of service tax for the reason that though the exemption provided under the Special Economic Zones Act 2005, SEZ Act has been prescribed by Notification dated March 3, 2009, but the appellant did not follow the conditions prescribed therein - signage income - sale of space or time for advertisement service or not - HELD THAT:- It is not in dispute that the appellant is a co-developer of the four SEZ‟s. Two of them are situated in Gurgaon and one each in Chennai and Hyderabad. The appellant has rented out immovable property in the SEZ to units located within the SEZ and has received rent. The appellant also rented out some space in the SEZ to units to enable them to put up boards for displaying the name for identification purpose, for which it charged signage charges - Commissioner was not justified in examining whether the conditions set out in the Notification dated March 3,2009 were satisfied or not for grant of any exemption from service tax. Section 26(2) of the SEZ Act does provide that the Central Government may prescribe the manner in which, and the terms and conditions subject to which, the exemptions shall be granted to the Developer under sub-section (1) but what is important to notice, is that, the word "prescribe" would mean “prescribed by rules made by the Central Government under the SEZ Act,” in view of the definition of "prescribed" under section 2(w) of the SEZ Act. The Notification dated March 3, 2009, which has been issued under section 93 of the Finance Act, therefore, has no application. Signage income - HELD THAT:- Under the agreement, the appellant rented out office space in the two SEZ units in return for a specified rent amount and in addition also rented out some space to these units for displaying their name for identification purpose, for which the applicant charged signage charges - In the first instance, irrespective of classification of the said service, the said service had been used by the SEZ units for their authorized operations. There is no dispute on this aspect either in the show cause notice or the impugned order. In such circumstances, such service would be exempt from payment of service tax under the SEZ Act and the confirmation of demand of service tax on this service cannot be sustained. Appeal allowed - decided in favor of appellant.
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