TMI Blog2023 (3) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... s to boost the SEZ units. The High Court of Andhra Pradesh in GMR AEROSPACE ENGINEERING LIMITED AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT] after analysing the provisions of the SEZ Act, 2005 and the provisions of the Finance Act, 1994 concluded that the notification issued under section 93 of the Finance Act, 1994 cannot be pressed into service for finding out whether a unit in SEZ qualifies for exemption or not. Subsequently, the Tribunal in M/S. SRF LIMITED VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, LTU NEW DELHI AND COMMISSIONER OF CGST, AND CENTRAL EXCISE, INDORE [ 2022 (4) TMI 989 - CESTAT NEW DELHI] dealt with the issue of entitlement of refund of service tax where some of the services were directly provided to and paid for by the SEZ unit while certain other services were provided to the head office which was registered as an Input Service Distributor (ISD) and on examining the various provisions of the SEZ Act, observed that there is duplication as the Act itself provides for exemption of central excise duty, customs duty and the service tax, however there are exemption notifications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in an exemption notification are required to be construed strictly, however once it is found that the applicant satisfies the same, the exemption notification should be construed liberally. Refund claim allowed - appeal allowed. - Excise Appeal No. 51193-51194 of 2020 - FINAL ORDER Nos. 50388-50389/2023 - Dated:- 23-3-2023 - SH. P. V. SUBBA RAO, MEMBER (TECHNICAL) AND MS. BINU TAMTA, MEMBER (JUDICIAL) Sh. Bharat B. Raichandani and Sh. Deepak Kumar Khokhar, Advocates for the appellant Sh. Rakesh Agarwal, Authorised Representative for the respondent ORDER The present appeal arises out of the remand proceedings. Earlier this Tribunal by order dated 09.12.2019 was pleased to remand the matter to the original authority to verify the date on which the appellant, SEZ unit made the payment of service tax and whether the impugned claims are within the time limit and if not whether the delay could be condoned. 2. Having reconsidered the two issues, the adjudicating authority vide order dated 29.05.2020 rejected the applications claiming refund of service tax paid on input services as barred by limitation. Being aggrieved, the appellant filed the appeal, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SRF Ltd., vs. Commissioner of Cus., C. Ex., S.t. LTU, New Delhi 2022 (64) GSTL 489 (Tri. Del.) b) Wabco India Ptd vs. Commissioner -2021 (54) GSTL 37 (Tri.Chen) c) DLF Assets Pvt. Ltd. Vs. Commissioner, Service Tax, Delhi-I 2021 (45) GSTL 176 (Tri. Del.) d) GMR aerospace Engineering Ltd., vs. Union of India 2019 (31) GSTL 596 e) ATC Tyres Pvt. Ltd., vs. Commissioner of GST CE, Trirunelveli 2021-VIL-106-CESTAT-CHE-ST f) CCE vs. Reliance Industries Ltd.-2019-TIOL-1754-CESTAT-AHM g) Himatsingka Linens vs. CCE -2019-TIOL-508-CESTAT-BANG h) Commissioner of Central Excise and Service Tax, Rajkot vs. Reliance Industries Ltd.,-2022-TIOL-19-CESTAT-AHM i) Government of Kerala vs. Mother Superior adoration convent 2021-TIOL-156-SC-MISC j) Commissioner of Central Excise and Service Tax, Rajkot vs. Reliance Industries Ltd. -2022-TIOL-19-CESTAT-AHM 7. In rebuttal, the main thrust of the Learned Authorised Representative was on the scope of remand as the matter was remanded by this Tribunal on limited issue to ascertain the time limit after verifying the date of payment of service tax and in the event of any delay, whether the same could be condoned. Referring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voice to the ISD has been wrongly taken as the relevant date for computing the period of one year and on the issue of condonation of delay the order of the adjudicating authority is silent. We feel that the adjudicating authority dealt with the matter with very closed mind and misconstrued the argument made by the appellant with reference to the applicability of the notification which have been noted in Para 17.6 of the earlier OIO dated 12.03.2019 which is quoted below:- 17.6. I find that it is the contention of the claimant that the limitation is applicable only in refund claim pertaining to ISD credits, payment to the service provider is made by the ISD and not the SEZ unit, time limitation of one year period would not apply in case of refund claim filed for ISD credits. From the plain reading of the above clause, I find that for deciding the time limit, the month in which actual payment of service tax has been made by the SEZ unit to the registered service provider is to be seen. There is nothing in the above clause which suggests that time limit of one year will not apply to an ISD. The above said notification lists out certain conditions subject to which refund of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - out of the claim of Rs. 5,21,60,728/- is admittedly time barred in claimant s own view then how the remaining amount can be within the time limit on the same criteria of the date of payment by ISD to the service providers . 10. The condonation of delay was rejected as according to the adjudicating authority no new grounds have been presented by the claimant for reconsideration. This reasoning of the Adjudicating Authority seems to be unreasonable as there cannot be any new grounds for the condonation of delay, as on today. The grounds on which a party may seek condonation of delay cannot change with the passage of time, however, the same needs to be examined in the light of the law prevalent on the point, particularly in the facts of the present case where we are dealing with the special statute of beneficial nature. The Adjudicating Authority took a very conservative approach in taking the view against the condonation of delay. 11. The Commissioner (Appeals) in a very routine manner reaffirmed the findings of the adjudicating authority both on the applicability of the limitation as well as on the condonation of delay by the impugned order. Hence the appellant has challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is claimed by way of exemption from service tax and cesses along with interest as applicable on delayed payment of service tax under the provisions of the said Act read with the rules made thereunder. (III) The refund of service tax on (i) the specified services that are not exclusively used for authorised operation, or (ii) the specified services on which ab-initio exemption is admissible but not claimed, shall be allowed subject to the following procedure and conditions, namely:- (a) the service tax paid on the specified services that are common to the authorised operation in an SEZ and the operation in domestic tariff area [DTA unit(s)] shall be distributed amongst the SEZ Unit or the Developer and the DTA unit (s) in the manner as prescribed in rule 7 of the Cenvat Credit Rules. For the purpose of distribution, the turnover of the SEZ Unit or the Developer shall be taken as the turnover of authorised operation during the relevant period. (b) the SEZ Unit or the Developer shall be entitled to refund of the service tax paid on (i) the specified services on which ab-initio exemption is admissible but not claimed, and (ii) the amount distributed to it in terms of clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of service provider STC No. of service provider Invoice* No. Date Value of service Service tax + cess amt. Amount distributed to the SEZ Unit/ Developer out of the amount mentioned at column No. (8) (claimed as refund) Document* under which amount mentioned at column (9) was distributed to the SEZ Unit/ Developer No. Date (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Total Amount 14. The Special Economic Zone Act, 2005 is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aras of the said decision:- 37. Thus, Section 26(1) of the SEZ Act is inconsistent with the three charging sections viz., Section 3 of the Central Excise Act, 1944, Section 12 of the Customs Act, 1962 and Sections 66, 66A and 66B of Chapter V of the Finance Act, 1994. In addition to the general principle of a specific law (pertaining to SEZ) prevailing over the general law (levying customs, central excise or service tax) and the later enactment (such SEZ Act, 2005) prevailing over the earlier enactments (Central Excise Act, 1944, Customs Act, 1962 and Finance Act, 1994), in the SEZ Act, the Parliament has explicitly resolved this inconsistency between the laws. Section 51 of the SEZ Act states that the provisions of SEZ Act override any other provisions of other laws. It reads as follows: 51.(1) 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. 38. Thus, insofar as supplies for authorized operations of SEZ developers and units are concerned, Section 26 of the SEZ Act overrides the charging sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied services that were common to both SEZ and ISD, the Tribunal observed that refund in respect of services covered in Table II of Form A can be preferred by the SEZ unit only after the ISD in the DTA distributes the tax pertaining to invoices under which services common to the SEZ and the DTA unit have been received, as it is only after the ISD issues the invoice distributing the tax credit that the SEZ is made aware of the tax liability pertaining to the said invoices. 18. In so far as the issue of limitation of one year for filing the refund claim is concerned the same stands answered by the Tribunal in the case of CCEx ST, Rajkot Vs. Reliance Industries Ltd. 2022-TIOL-19-CESTAT-AHM, whereby it has been clarified that the condition under para 3 (III) (e) of the Notification for filing the refund claim within one year is applicable only in respect of refund claimed under Table I of Form A-4. For Table II, the refund claim can be filed when the SEZ unit receives the ISD invoices as the format in Table II particularly the specifications in column 9,10 and 11, required that refund cannot be filed without the ISD invoices. Further, it was held that no time limit has been prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in Table-I of Form A-4. Clause (b) on the other hand is applicable to both refund covered under Table-I as well as refund covered under Table-II of Form A-4. Similarly, clause (c), (d), (f) and (g) are equally applicable to refund covered under Table-I and Table-II of Form A-4 of the notification. However, on bare perusal of clause (e) it is clear that the same is applicable only for refund covered under Table-I of Form A-4 since the Table-II only covers refund of common credit distributed by an ISD/Head Office. Therefore, in our clear view Para 3 (III)(e) of notification neither can be made applicable in respect of refund made under Table-II nor it is applicable. As regard delay in issuing the ISD Invoices firstly, there is no time limit prescribed under Rule 7 of Cenvat Credit Rules, 2004 for distributing credit under ISD Invoices nor any dispute was raised as regard the time and manner of issue of ISD Invoices at the end of ISD Registrant therefore, there is no illegality in issuance of ISD Invoice belatedly. In view of above, we are of the clear view that clause 3(III)(e) of Notification No.12/2013-ST is not applicable in respect of refund claim made on the basis of ISD In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied in case of refund made in Table-II of Form A-4 accordingly, the condition of Para 3(III)(e) of notification is clearly not applicable in case of refund claim made by the respondent in Table-II of Form A-4 appended to the notification. 19. We may also like to note that the general principles of interpretation of the exemption notification that it has to be construed strictly shall not really apply to the SEZ units which are otherwise exempted from the liability of the various duties under the main statute itself. The avowed object of providing such exemptions has to be the guiding principle for the applicability and the interpretation of the Notification to the SEZ units. 20. Applying the law as interpreted by the various judicial decisions to the facts of the present case, we find that : i) the appellant is engaged in the manufacture and export of pharmaceutical products at their SEZ unit in Pithampur. ii) the appellant had obtained the necessary Letter of Approval for undertaking authorised operations within the SEZ. iiii) the appellant has an ISD unit, i.e., Head office in Mumbai iv) the appellant receives various input services for carrying out authoris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect . The Court went ahead to hold that in the event of any ambiguity in such construction, such ambiguity must be in favour of that which is exempted. On the principle that there is a clear distinction between exemptions which are to be strictly interpreted as opposed to beneficial exemptions having the purpose of encouragement or promotion of certain activities, the Court relied on several decisions. It is relevant to quote the para from the said judgment: 16. However, there is another line of authority which states that even in tax statues, an exemption provision should be liberally construed in accordance with the object sought to be achieved if such provision is to grant incentive for promoting economic growth or otherwise has come beneficial reason behind it. In such cases, the rationale of the judgements following Wood Papers (supra) does not apply. In fact, the legislative intent is not to burden the subject with tax so that some specific pubic interest is furthered. 22. The finding given by the adjudicating authority in the order in original dated 29.5.2020 that for the period January 2017 to March 27, the refund claim was filed on 10.10.2017 and for the period Apr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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