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Infosys Limited (SEZ) Versus The Commissioner of Service Tax

2017 (10) TMI 504 - CESTAT BANGALORE

SEZ Unit - Refund claim - N/N. 9/2009-ST and 15/2009-ST - Held that: - units operating in Special Economic Zones (SEZs) are not to be charged any duties of Central Excise/Customs or other taxes and wherever any such taxes/duties have been paid, they would be entitled to the refund of the same - the appellant is entitled to the subject refund claims as per relevant provisions of the applicable laws/Notifications. - The decision in the case of Reliance Industries Ltd. Versus Commissioner of Ce .....

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- Dated:- 1-9-2017 - Shri S. S. Garg, Judicial Member And Shri Ashok K. Arya, Technical Member Mr. K. S. Ravi Shankar & Mr. N. Anand, Advocates For the Appellant Mr. N. Jagadish, AR For the Respondent ORDER Per : Ashok K. Arya M/s. Infosys Ltd. has filed these four appeals against common Order-in-Appeal No. 169-173/2016 dated 1.11.2016 whereunder various refund claims of the appellant have been denied. 2. The brief facts are that: (i) The appellant operates in Special Economic Zones (SEZs) .....

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udicator s orders were confirmed against which the present appeals are filed. It was held by the first appellate authority that due to amending Notification No.15/2009-ST refund was not available due to limited scope of the exemption. 3. Both sides have been heard. 4. The Appellant s main submissions are as follows: (i) It has been held repeatedly that the amending Notification No.15/2009-ST does not in any manner deprive the benefit of exemption, given the wide scope of the overriding mechanism .....

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mpugned order. 6. After having carefully considered the facts on record and the submissions of both sides, it appears that the appellant is entitled to the subject refund claims as per relevant provisions of the applicable laws/Notifications. The case laws also support the principle that units operating in Special Economic Zones (SEZs) are not to be charged any duties of Central Excise/Customs or other taxes and wherever any such taxes/duties have been paid, they would be entitled to the refund .....

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oms, under the Customs Act, 1962 or the Custom Tariff Act, 1975 or any other law for the time being in force, on goods imported into, or service provided in, a Special Economic Zone or a Unit, to carry on the authorised operations by the Developer or entrepreneur; (b) exemption from any duty of customs, under the Customs Act, 1962 or the Customs Tariff Act, 1975 or any other law for the time being in force, on goods exported from, or services provided, from a Special Economic Zone or from a Unit .....

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onomic Zone or Unit or services provided in a Special Economic Zone or Unit by the service providers located outside India to carry on the authorised operations by the Developer or entrepreneur; (e) exemption from service tax under Chapter-V of the Finance Act, 1994 on taxable services provided to a Developer or Unit to carry on the authorised operations in a Special Economic Zone; (f) exemption from the securities transaction tax leviable under section 98 of the Finance (No. 2) Act, 2004 in cas .....

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r law for the time being in force or in any instrument having effect by virtue of any law other than this Act. 6.2 The Notification No.9/2009 dated 3.3.2009 gives the exemption to taxable services from the whole of the service tax leviable under Section 66 of Finance Act, 1994 to the taxable services provided to a developer or unit of a Special Economic Zone. The relevant parts of the said Notification are reproduced herein below: Notification No. 9 / 2009 ST dated 3.3.2009 In exercise of the po .....

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d to be done before such supersession , the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts taxable service of any description as defined in clause (90) of sub-section (1) of section 65 of the said Act provided to a developer of Special Economic Zone or a unit (including a unit under construction) of Special Economic Zone by any service provider for consumption of the services within such Special Economic Zone, from the whole of service tax .....

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e exemption actually uses the specified services in relation to the authorised operations in the Special Economic Zone; (c) the exemption claimed by the developer or units of Special Economic Zone shall be provided by way of refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone; (d)….. (e).…. (f)…… 2 .................. 3. The exemption contained in this notification shall apply only in respect o .....

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ection (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.9/2009-Service Tax, dated the 3rd March, 2009 which was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 146(E), dated the 3rd March, 2009, namely:- In the said notification,- (A) in paragraph 1, in the proviso .....

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iming the exemption, by way of refund in accordance with clause (c), has actually paid the service tax on the specified services; 6.4 The Government of India has also issued instructions vide Circular No.114/8/2009-ST dated 20.5.2009 on the subject of refund. The relevant parts of the same are reproduced herein below: Circular No. 114/8/2009-S.T., dated 20-5-2009 F. No. 354/163/2006-TRU Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Del .....

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eloper or units of a SEZ, whether or not the said taxable services are provided inside the SEZ. 2. Notification No. 15/2009-Service Tax, dated 20-5-2009 has been issued to amend the aforesaid Notification 9/2009-S.T., dated 3-3-2009 to provide unconditional exemption to services consumed within the SEZ without following the refund route thus dispensing with the requirement of first paying the tax by the service provider and then claiming the refund thereof by developer/unit. The exemption by way .....

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R 465 (Tri.-Mumbai) has inter alia observed as under: 3.10 The two notifications, in conjunction, have given effect to the statutory promise by devising two methods for availing the exemption - by upfront exemption when the service is rendered within the geographical boundaries of the Special Economic Zone and by the refund route where the physical performance of service is not within the boundaries but is intended for the authorized operation of the developer or unit. A pre-approval and verific .....

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e Special Economic Zones Act, 2005 and the need for a harmonious construction of the relevant notifications of 2009 and, in doing so, accorded a primacy to the statutory provisions. Accordingly, in re Tata Consultancy Services, the eligibility for refund, even where the procedure was susceptible to be resorted to for denial of exemption, under Section 11B of Central Excise Act, 1944 read with Section 83 of Finance Act, 1994 was laid down. Accordingly, we refer to the decision therein: 6.2 Coming .....

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in the SEZ except for services consumed wholly within the SEZ. This view of the department is also incorrect. Notification No. 9/2009-S.T. exempts the taxable services specified in Clause (105) of Section 65 of the Finance Act, 1994 which are provided in relation to the authorized operations in a SEZ and received by a developer or units of a SEZ, whether or not the said taxable services are provided inside the SEZ, from the whole of the service tax leviable thereon under Section 66 of the Finan .....

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entitled for refund of the service tax paid under the provisions of Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. If the appellant is eligible for refund under Section 11B, then the same cannot be denied on the ground that the claim was made under Notification No. 9/2009-S.T. In this case, there is no dispute that the services were provided in relation to the authorized operations of the appellant within the SEZ. From the records it is seen that the a .....

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rovisions prevail over the provisions contained in any other law for the time being in force. It is the avowed policy objective of the Government of India that exports should not bear the burden of taxes. If this policy objective has to be sub-served and the objective realized broader view of the provisions relating to refund has to be taken. Therefore, even if the appellant was not eligible for refund under Notification No. 9/2009-S.T., dated 3-3-2009, the appellants were certainly eligible for .....

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009 issued under Section 93(1) of the Act, considered in the light of the overarching provisions of Sections 7 and 26(e) of the 2005 Act, the conclusion appears compelling that neither Notification 9/2009 nor 15/2009 disentitle immunity to service tax enjoined by the provisions of the 2005 Act. It therefore appears that Notification Nos. 9/2009 and 15/2009 merely contour the process by which the benefit of exemption/immunity to tax is operationalised. Notification Nos. 9/2009 and 15/2009 have pr .....

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are calibrated to enable recipients of taxable services (exempt from liability to tax under the provisions of the 2005 Act), to claim refund of the service tax, wherever assessed and collected by Revenue or remitted otherwise by the taxable service provider, inadvertently. Considered in the light of this analysis, the substituted provisions, of clause/sub-paragraph C of Notification No. 15/2009 cannot be inferred to have imposed any disability on the recipient of services consumed wholly within .....

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nd No. 15/2009-S.T. have only operationalized the exemption provided. Para 11 of the above judgment is reproduced below : 11. On true and fair construction of Notifications 9/2009 and 15/2009 issued under section 93(1) of the Act, considered in the light of overarching provisions of Sections 7 and 26(e) of the 2005 Act, the conclusion appears compelling that neither Notification 9/2009 nor 15/2009 disentitle immunity to service tax enjoined by the provisions of the 2005 Act. It therefore appears .....

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ce tax provided under Section 7 or 26 of the 2005 Act cannot be so interpreted as to be eclipsed the procedural prescriptions of Notification No. 9/2009 or 15/2009. These notifications are calibrated to enable recipients of taxable services (exempt from liability to tax under the provisions of the 2005 Act), to claim refund of the service tax, wherever assessed and, collected by Revenue or remitted otherwise by the taxable service provider, inadvertently. Considered in the light of this analysis .....

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(32 of 1994) on taxable services provided to a Developer or Unit to carry on the authorized operations in Special Economic Zone. 51. The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. 7. From the provisions contained in Section 26(1)(e) of the SEZ Act, read with Rule 30(10) of the SEZ Rules, 2006, it can be seen that no ser .....

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