Relief to Forbes Facility Services: CESTAT grants Service Tax Exemption as Services were provided to SEZ Unit [Read Order]

In a major relief to Forbes Facility Services Pvt. Ltd, the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted service tax exemption as services were provided to SEZ unit.

The period of dispute involved in this case is from 2009-10 to 2014-2015. In exercise of the powers conferred under Section 93 of the Finance Act, 1994, the Central Government had issued the Notification No.25/2015-S.T. dated 20.06.2012 in exempting various taxable services from payment of Service Tax.

It is fact that the two hospitals in this case viz., GPPH and MAIDS are run by the Government of N.C.T. We have examined the agreements entered into between the Appellant and G. B. Pant Hospital, Government of N.C.T., New Delhi. Such agreement was entered into by the service recipient on behalf of the President of India, meaning thereby that the said hospital is a Government Hospital.

Since, the appellant is a provider of the taxable service, and has provided services to the government authority, such services were exempted in view of the Notification dated No.25/2015-S.T. dated 20.06.2012. However, for the subsequent period w.e.f. 11.07.2014, there was confusion inasmuch as the phrase provision of service to the Government was not specifically finding place in such amended Notification. For removing the ambiguity in the original notification vis-à-vis the amended notification, the Ministry of Finance had issued instructions vide D.O.F.No.334/15/2014-TRU dated 10.07.2014.

A Two Member Bench of the Tribunal comprising S.K.Mohanty, Member(Judicial) and M. M. Parthiban, Member (Technical) observed that “In respect of claiming exemption for payment of service tax on the services provided to SEZ Unit/Developer, the Notification No. 09/2009-S.T. dated 03.03.2009 as amended, in explicit terms provides that the services provided to the SEZ should be considered to grant of the benefit of exemption. In the case in hand, since the appellant had in fact provided the services to an unit of SEZ unit, in our considered view the benefit of the exemption provided under the Notification dated 03.03.2009 should also be available.”

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