The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that no service tax is leviable on Goods Transport Agency (GTA) services availed outside to special economic (SEZ) zone.
On verification of accounts, it was noted that the appellant had not discharged Service Tax under GTA Services which was payable by them. The Show Cause Notice was issued proposing to demand the Service Tax under GTA Services along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalties. On appeal the Commissioner (Appeals) upheld the same. Hence the appeal.
The counsel for the appellant submitted that the appellant being an SEZ unit is exempted from paying Service Tax on input services, as per the Notification No. 4/2004. Though this contention was put forward before the authorities below, the same was not accepted stating that the services have been availed outside the SEZ zone and that as per Notification No. 4/2004, the consumption of the services should be within the SEZ zone itself.
The counsel adverted to the Notification No. 4/2004 and stated that there is nothing in the Notification which says that the input services have to be availed and consumed within SEZ area itself so as to avail the benefit of an exemption. The input services can be availed outside the SEZ zone also and there is no geographical limitation in the case of input services. Section 51 of the SEZ ACT was also relied upon by the counsel to argue that the said Section gives an overriding effect and therefore the benefit of exemption as per the Notification ought to be granted.
The Tribunal in the case of M/s. Vision Pro Event Management had also considered the issue whether exemption from Service Tax is eligible when the services are availed outside to the SEZ zone. It was held that “Our view is supported by the fact that the notification which superseded Notification No. 4/2004 has categorically stated that whether or not the taxable services are provided inside the SEZ the exemption is available.”
A Two-Member Bench comprising Vasa Seshagiri Rao, Technical Member and CS Sulekha Beevi, Judicial Member observed that “After considering the facts and evidences placed before us and following the ratio laid in the decisions, we are of considered opinion that the demand cannot sustain and requires to be set aside. Ordered accordingly”.
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