TMI Blog2021 (8) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... er supply service - HELD THAT:- Admittedly, the services were provided to service recipient situate in SEZ. It is also brought out that as per Notification NO.40/2012-ST dated 20.06.2012, the service tax is exempted - Only because the appellant did not produce the above documents, the exemption as per Notification No.40/2012-ST was denied and the department has demanded service tax. It is seen from Annexure to the reply of SCN that the appellant has produced the document Form A2 along with reply. Section 51 of SEZ Act, 2005 is to have an overriding effect. The denial of the benefit of exemption by relying upon procedural requirement of a notification would be against the provisions laid down in the SEZ Act - the demand of service tax under Man power service cannot sustain. This issue is found in favour of the appellant and against the respondent. Packing and repacking services - demand of service tax under BSS - HELD THAT:- The demand of service tax under Business Support Service on the activity of packing and repacking cannot sustain and requires to be set aside which we hereby do. It is also to be stated that definition of Business Support Service as contained in Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Intercontinental Consultants Technocrats Pvt. Ltd. Vs UOI - 2013 (29) STR 9 (Del.) to argue that for the disputed period reimbursable expenses are not to be included in the taxable value. He pleaded to set aside this demand. 4.2 With regard to the second issue of demand under man power supply service, he stated that demand has been raised for the reason that appellant has not produced necessary documents to claim the exemption as per notification. It is not disputed by the department that appellant has rendered service to a recipient situated in SEZ. Three different types of exemptions are prescribed under SEZ law with regard to exemption of taxes and duties; (i) to the goods or services exported out of SEZ or imported into SEZ from DTA unit (ii) to duties / taxes specified under Section 26 (1) of Special Economic Zones Act, 2006 and (iii) from State taxes in terms of Section 50 of SEZ Act, 2005. The exemption notifications issued under Finance Act, 1994 are general and available to all including SEZ units. However, Section 26 (1) of SEZ Act, 2005 is a special power of exemption available to unit operating under special enactment i.e. SEZ Act. Therefore the notifications i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Specified Officer of SEZ. Only because the appellant did not produce the above documents, the exemption as per Notification No.40/2012-ST was denied and the department has demanded service tax. It is seen from Annexure to the reply of SCN that the appellant has produced the document Form A2 along with reply. Further, the Hon ble High Court in the case of GMR Aerospace Engineering Ltd. (supra) had an occasion to analyse whether such tax/duty exemptions can be denied by relying upon the notifications issued. The Hon ble High Court held as under : 27. A look at Section 93 of the Finance Act, 1994 would show that it has nothing to do with the units located in a SEZ. Section 93 is a general power of exemption available for the benefit of all and sundry. In fact, Section 93 was substituted in its present form by Finance (No. 2) Act, 1998 with effect from 16-10-1998. The notifications issued under Section 93 may cover taxable services of any description. Even the units located outside a SEZ are entitled to the benefit of the notifications issued under Section 93 of the Finance Act, 1994, if the conditions stipulated in those notifications are fulfilled. 28. The SEZ Act, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , wherein the Central Government has prescribed the terms and conditions for grant of exemptions under Rule 22. Therefore, there is no question of comparing the terms and conditions prescribed in Rule 22 with the terms and conditions prescribed in the notifications issued under any one of five enactments listed in Section 26(1) to find out whether there was any inconsistency. 31. Support can be drawn for the above interpretation, from Section 50 of the SEZ Act, 2005 also. Section 50 of the SEZ Act, 2005 enables State Governments to enact laws for the grant of exemption from state taxes, levies and duties. Since a Central Law cannot provide for exemption from the levy of State taxes, Section 50 merely enables the State Governments to enact laws. 32. A combined reading of Sections 7, 26 and 50 of the SEZ Act, 2005, would show that SEZ Act, 2005 speaks of three different types of exemptions. They are, - (1) exemption from payment of taxes under the enactments specified in the First Schedule, in respect of goods and services exported out of, or imported into or procured from a DTA by a unit in a Special Economic Zone or a Developer under Section 7, (2) exemption from payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEZ Act, 2005 is to have an overriding effect. The denial of the benefit of exemption by relying upon procedural requirement of a notification would be against the provisions laid down in the SEZ Act. We therefore hold that the demand of service tax under Man power service cannot sustain. This issue is found in favour of the appellant and against the respondent. 8. The third issue is with regard to demand of service tax under BSS. The appellant is rendering certain packing and repacking services in their warehouse so as to make the package of goods seaworthy for export. The department has demanded service tax holding that such activities would be a service falling under BSS. As per Section 2 (f) of Central Excise Act, 1944, packing and repacking would fall under manufacture . The very same activity cannot be termed to be a service. We therefore conclude that the demand of service tax under Business Support Service on the activity of packing and repacking cannot sustain and requires to be set aside which we hereby do. It is also to be stated that definition of Business Support Service as contained in Finance Act, 1944 does not mention such activity of packing/repacking. For ..... X X X X Extracts X X X X X X X X Extracts X X X X
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