The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) of the Mumbai bench has held that the exemption under section 26 of the Economic Zones Act overrides all other laws and demand for service tax is not sustainable.
M/s eClerx Services Ltd, the appellant challenged the order dated 15th March 2017 of Commissioner of CGST & CX, Navi Mumbai ordering recovery of ₹ 11,89,13,942 as tax payable under section 73 of Finance Act, 1994 for the period from 2008-09 to 2012-13 along with applicable interest under section 75 of Finance Act, 1994.
It was alleged that between June 2009 and February 2011, the appellant had rendered ‘taxable service’ valued at ₹ 80,16,46,587 on which the liability of ₹ 8,25,69,598 should have been discharged and, by notification no. 9/2009-ST dated 3rd March 2009 and as amended by notification no. 15/2009-ST dated 20th May 2009, claimed as a refund thereafter upon compliance with the conditions specified therein.
The recovery of ₹ 11,59,10,135 was ordered on account of breach of condition in the respective notifications embodying the procedure by which the appellant could have availed exemption from service tax on supply of services to units in special economic zones (SEZ).
It was viewed by the Tribunal that the required documentation was not available for the entire dispute period but, it cannot be denied that the eligibility did exist at some point. Further viewed that the procedural infirmities, for a shorter or longer time, do not supplant the exemption accorded to the impugned supply of services.
A Coram of C J Mathew, member (technical) and Ajay Sharma, member (judicial) observed that in Special Economic Zones Act, 2005 is different from the rules which delineate ‘exports’ from ‘domestic supply’ in the scheme of service tax law and, given section 51 of Special Economic Zones Act, 2005, have to be read in the context of the exemption afforded by section 26 of Special Economic Zones Act, 2005 and not in terms of Finance Act, 1994.
The Tribunal while allowing the appeal held that the demand for allegedly rendering services within India does not sustain and set aside the impugned order. Shri Mihir Deshmukh and Ranjan Mishra, Advocate appeared for the appellant and Shri Dilip Shinde, Assistant Commissioner appeared for the respondent.
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