TMI Blog2018 (10) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... y basis at the respective site. These weekly log sheets are then made the basis for issuance of the invoice by the service provider to the service recipient. There is no dispute that the sites in respect of which these invoices/ log sheets are, belong to the SEZ Unit or a developer and these services have been wholly consumed at the said site - the services provided by the appellant in respect of these sites have been provided by the appellant to the SEZ Unit or developer. Further there appears to be no dispute also about the fact that these services are falling in the category of the approved services for the SEZ Operation, in respect of those SEZ Unit/ Developer. Since as per the documents produced along with appeal, there is no dispute in respect of the fact that these services have been provided to a SEZ Unit / Developer and consumed within the SEZ, the exemption is admissible in respect of the services so provided. Commissioner also has not sought to state the contrary but has only sought to deny the exemption on the ground that in these instances the exemption should not have been allowed affront but by way of the claim of refund by the SEZ Unit/ Developer. Since there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... One Crore Four Lakhs Twenty Nine Thousand Three Hundred and Twenty Six Only), as detailed in Annexure A to the Show Cause Notice dated 19.12.2013, under Section 73(2) of the Finance Act, 1994. I further direct the assessee i.e. M/s Sanghvi Motors Ltd., Pune, to pay the aforesaid demand forthwith. 21.2 I determine and confirm the demand of service tax amounting to ₹ 1,56,91,121/- (Rupees One Crore Fifty Six Lakhs Ninety On e Thousand One Hundred and Twenty One Only), as detailed in Annexure A to the Show Cause Notice dated 19.12.2013, under Section 73(2) of the Finance Act, 1994. I further direct the assessee i.e. M/s Sanghvi Motors Ltd., Pune, to pay the aforesaid demand forthwith. 21.3 I order recovery of interest, at the appropriate rate(s) as applicable during the relevant period, on demand of service tax as confirmed at paras 21.1 and 21.2 above, under the provisions of Section 75 ibid. 21.4 I impose a penalty of ₹ 40,000/- (Rs 5,000/- each for every half yearly ST-3 return for the period from April 2009 to March 2011 and ₹ 10,000/- each for the period April 2011 to March 2012), for their failure to give correct facts and figures in the serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or supply of the said cranes which were to be ultimately by SEZ Units/ developers in SEZ only. v. Since there is no suppression or fraud in the case with intent to evade payment of tax, extended period of limitation is not invokable; vi. Since there I no liability for payment of service tax no penalty should be imposed on them. 4.0 Arguing for the Appellants, Sh M H Patil, Learned Advocate submitted i. The entire services of supply of tangible goods (Cranes) were used by the SEZ units/ Developers/ contractors within the SEZ unit as is evident from the Purchase Orders/ Contracts/ Certificates/ Declarations of the SEZ units/ Developers/ Contractors; tax invoices of the Appellant, log books duly and jointly signed by the representative of the Appellants and SEZ units/ Devceloper/ Contractors. ii. The demand has been made in respect of the supplies made to the party s as indicated in table 1 below: Sno Name Status Amount 1 M/s Tril Info Park Ltd SEZ Unit 908650 2 M/s JSL SEZ Unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of limitation is not invokable in this case. xi. In any case if the tax is demanded from them, then the same will be admissible as refund to the SEZ/ Unit developer. x. Since the issue is in respect of interpretation of exemption notification, no penalty is imposable. xi. Appeal filed should be allowed. 5.0 Arguing for the Revenue, Shri M K Sarangi, Joint Commissioner, Authorized representative submitted that- i. During course of audit it was found that the services in respect of appellant were claiming the benefit of exemption under notification 9/2009-ST or 17/2011ST was not admissible to them as these service were not provided to SEZ unit/ Developer, but to Contractor/ Sub Contractor of the said unit or developer. ii. No evidence has been provided by the appellant that the services provided by them to SEZ unit or entity in SEZ been consumed entired within the SEZ. iii. In respect of services provided to contractor or sub contractor of the SEZ Unit/ Developer, the benefit of exemption shall not be available, because there is privity of contract between contractor and sub contractor, and not between the SEZ unit/ developer and the appellant who are prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs Year Value of Services provided to SEZ Service Tax + Cesses Reasons/ Contraventions 1 2 3 4 2009- 10 5,54,99,316 57,16,430 The services provided are not wholly consumed within the SEZ. so benefit of Notification not admissible 2010- 11 4,57,56,284 47,12,896 Sub total 10,12,55,602 1,04,29,329 2009- 10 4,80,10,101 49,45,040 The services provided are not provided directly to developer or SEZ Unit, so benefit of Notification not admissible 2010- 11 9,16,84,936 94,43,548 2011- 12 1,26,45,951 13,02,533 Sub total 15,23,40,988 1,56,91,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 M/s Samsung Engg Co Ltd ONGC Petro Additions Ltd 6 M/s Sichuan Electric Power Design Wardha Power Company Ltd 7.0 Hon ble Delhi High Court has in case of Jindal Stainless Limited Vs Un ion Of India [2017 (61) STR 130 (Del)] held as follows:- 29. Before proceeding further, it would be relevant to reproduce Section 26(1)(e) of the SEZ Act, 2005 and Rule 31 of SEZ Rules, 2006. Section 26(1)(e) reads as under: Section 26. Exemptions, drawbacks and concessions to every Developer and entrepreneur. (1) Subject to the provisions of sub-section (2), every Developer and the entrepreneur shall be entitled to the following exemptions, drawbacks and concessions, namely :- (a) (e) Exemption from service tax under Chapter V of the Finance Act, 1994 (32 of 1994) on taxable services provided to a Developer or Unit to carry on the authorised operations in a Special Economic Zone; (f) . (2) The Central Government may prescribe the manner in which, and the terms and conditions subject to which, the exemptions, concessions, drawback or other bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubt true that in constructing fiscal statute and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed. if, one the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made thereunder before we can come to the conclusion that the appellant was liable to assessment as contended by the Sales Tax Authorities. In that case this Court noted with approval, the following observation of Lord Russel of Killowen in Inland Revenue Commissioner v. Duke of Westiminser [1936] A.C.I, 24: I confess that I view with disfavour the doctrine that in taxation cases the subject is to be taxed if in accordance with a Court's view of what i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the expression 'manufacture' cannot be said to be erroneous. The judgment of the High Court upholding the levy of additional toll tax in the case is also unsustainable. 32. A plain grammatical reading of Section 26(1)(e) of the SEZ Act, 2005 makes it clear that taxable services provided by a service provider to a Developer or a Unit/entrepreneur to carry out authorised operations in a Special Economic Zone are exempted from levy of service tax. Similarly, a bare perusal of Rule 31 of the SEZ Rules, 2006 make it abundantly clear that the exemption from service tax is available on services rendered to a developer or a unit/entrepreneur for carrying out authorised operations. Further, from a combined reading of Section 26(1)(e) with Rule 31 makes it evident that the only condition that is required to be satisfied to avail the service tax benefit under the said provisions is that the services must be rendered for the purpose of carrying out the authorised operations in a special economic zone . Had it been the intention of the legislature that only those services are exempted from levy of service tax that are rendered within the special economic zones, the legis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong the enactments in respect of which exemption from taxes/ duties/ cesses is available under section 7 of the 2005 Act. However Section 26(1)(e) enacts that subject to the provisions of sub section (2) thereof, every developer and entrepreneur shall be entitled to exemption from Service Tax under Chapter V of the Act on taxable services provided to a developer or unit to carry on the authorized operations in a SEZ. 8. In view of the legislated exemption supra and since the provisions of 2005 Act are provided an overriding effect vide Section 51; and absent any provision in the Act which eclipses the overarching trajectory of the 2005 Act, the immunity to Service Tax in respect of taxable services provided in relation to SEZ is a legislatively enjoined immunity. Therefore, any Service Tax paid/ remitted by a service provider is liable to be refunded to the provider who has remitted Service tax in relation to taxable services provided to a developer or unit, to carry on authorized operations in a SEZ. 9. .. 10. In so far as Notification No 15/2009-ST is concerned, Para c of the earlier Notification No 9/2009ST was substituted. The current requirement is that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Terminals Ltd [2015 (40) STR 200 (T-Ahmd)] 10.0 Notification No 9/2009-ST as amended or 17/2011-ST as they were then are reproduced below: GOVERNMENT OF INDIA MINISTRY OF FINANCE (Department of Revenue) New Delhi, the 3 rd March, 2009. Notification No.9/2009-Service Tax G.S.R. (E).- In exercise of the powers conferred by subsection (1) of section 93 of the Finance Act, 1994 (32 of 1994), and in supersession of the notification of the Government of India, Ministry of Finance ( Department of Revenue), No. 4/2004-ServiceTax, dated the 31st March, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section ( i ) dated the 31st March, 2004, vide, G.S.R.248(E), dated the 31st March, 2004, except as respects things done or omitted to be done before such supersession, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services specified in clause (105) of section 65 of the said Finance Act, which are provided in relation to the authorised operations in a Special Economic Zone, and received by a developer or units of a Special Economic Zone, whether or no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for refund of service tax paid on specified services; (c) the developer or units of Special Economic Zone shall file the claim for refund to the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be; (d) the developer or units of Special Economic Zone who is not registered as an assessee under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder, or the said Finance Act or the rules made thereunder, shall, prior to filing a claim for refund of service tax under this notification, file a declaration in the Form annexed hereto with the respective jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be; (e) the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after due verification, allot a service tax code (STC) number to the developer or units of Special Economic Zone within seven days from the date of receipt of the said Form; (f) the claim for refund shall be filed, within six months or such extended period as the Assistant Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment 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,─ the sub-paragraph (c), the following shall be substituted, namely:- (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 except for services consumed wholly within the Special Economic Zone; (2) for sub-paragraph (d), the following shall be substituted, namely:- (d) the developer or units of Special Economic Zone claiming the exemption, by way of refund in accordance with clause (c), has actually paid the service tax on the specified services; (3) after sub-paragraph (f), the following sub-paragraph shall be inserted, namely:- (g) the developer or unit of a Special Economic Zone shall maintain proper account of receipt an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing taxable services, received by a Developer or Unit of a SEZ, for the authorised operations, namely:- (i) services listed in clause(i) of sub-rule (1) of rule 3 of the Export of Services Rules, 2005 in relation to an immovable property situated within the SEZ; or (ii) services listed in clause (ii) of sub-rule (1) of rule 3 of the Export of Services Rules, 2005, as are wholly performed within the SEZ; or (iii) services other than those falling under (i) and (ii) above, provided to a Developer or Unit of SEZ, who does not own or carry on any business other than the operations in the SEZ; (b) for the purpose of claiming exemption, the Developer or Unit of SEZ shall obtain a list of taxable services as are required for the authorised operations approved by the Approval Committee (hereinafter referred to as the specified services) of the concerned SEZ; (c) the Developer or Unit of SEZ who does not own or carry out any business other than SEZ operations, shall furnish a declaration to that effect in Form A-1, verified by the Specified Officer of the SEZ, in addition to obtaining list under condition (b) above, for the purpose of claiming exemption; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this notification, shall maintain proper account of receipt and use of the specified services on which exemption is claimed, for authorised operations in the SEZ. 3. The following procedure should be adopted for claiming the benefit of the exemption contained in this notification, namely:- (a) the Developer or Unit of a SEZ, who has paid the service tax under sections 66 of the Finance Act, shall avail the exemption by filling a claim for refund of service tax paid on specified services used for the authorised operations; (b) the Developer or Unit of a SEZ who is registered as an assessee under the Central Excise Act, 1944 (1 of 1944) or the rules made there under, or the said Finance Act or the rules made there under, shall file the claim for refund to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the SEZ or registered office or the head office of the Developer or Unit, as the case may be, in Form A-2; (c) the Developer or Unit of a SEZ who is not so registered under the provisions referred to in clause (b), shall, before filing a claim for refund under this notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (g) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, after verifying that,- (i) the refund claim is complete in all respects; (ii) the information furnished in Form A-2 and in supporting documents correctly indicate the service tax involved in the specified services used for the authorised operations in the SEZ, which is claimed as refund, and has been actually paid to the service provider, shall refund the service tax paid on the specified services; (h) a service provider, shall provide the specified services falling under ‗wholly consumed category, under exemption granted by this notification, to a Developer or Unit of SEZ, for authorised operations, subject to the production of documents specified in sub-para (b) of para 2 and in addition wherever applicable, documents specified in sub-para (c ) para 2, i.e., declaration in Form A-1; (i) where any refund of service tax paid on specified services is erroneously refunded for any reasons whatsoever, such service tax refunded shall be recoverable under the provisions of the said Finance Act and the rules made there under, as if it is recovery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notification, what is the treatment for service tax paid on taxable services which do not fall in the category of wholly consumed services , and also are not 'shared services'? Is refund available? (ii) Whether in the case of category (iii) services referred in paragraph 2(a) of the notification, 'proportionate refund' applies to only 'shared services' i.e. services that are used both for SEZ (Special Economic Zone) authorised operations as well as DTA (Domestic Tariff Area) operations? All taxable services (under section 66 or section 66A) received by a SEZ Unit/Developer for the authorised operations, have been exempted in the first paragraph of notification 17/2011-ST, subject to conditions. In Paragraph 2, conditions attached to this exemption are prescribed. In terms of paragraph 2(a), refund route is the default option for all who intend to claim the exemption granted by the notification in its first paragraph. However, an exception is provided in the form of ab initio(upfront) exemption, to the 'wholly consumed' services. Services which fall outside the definition of 'wholly consumed' ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant to the SEZ Unit or developer. Further there appears to be no dispute also about the fact that these services are falling in the category of the approved services for the SEZ Operation, in respect of those SEZ Unit/ Developer. 12.0 Since as per the documents produced along with appeal, there is no dispute in respect of the fact that these services have been provided to a SEZ Unit / Developer and consumed within the SEZ, the exemption is admissible in respect of the services so provided. Commissioner also has not sought to state the contrary but has only sought to deny the exemption on the ground that in these instances the exemption should not have been allowed affront but by way of the claim of refund by the SEZ Unit/ Developer. However from the plain wordings of the Section 26(1)(e) of SEZ Act, 2005 read with Rule 31 of The SEZ Rules, 2006, and notification No 9/2009-ST dated 03-03-2009 as amended by Notification No 15/2009-ST we are of the view that Appellants have substantially complied with the conditions prescribed. Since there has been substantial compliance the order of Commissioner holding that these services have not been wholly consumed within the SEZ is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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