The Mumbai Bench of Customs Excise and Service Tax ( CESTAT ) Appellate Tribunal has held that the refund claim wholly consumed within SEZ could not be denied once the service tax had been paid.
The appellant, Vishay Semiconductor India Pvt Ltd filed refund claim of `6,83,442/- for the period from 15th December 2009 to 30th June 2010 for Service Tax paid on the specified service used in relation to the authorised operations in the SEZ under notification. The adjudicating authority rejected the claim for the amount of `1,95,127/-.
Out of the total rejected claim, `1,91,007/- was rejected on the ground that the input services were wholly consumed within SEZ which were unconditionally exempted from payment of Service Tax and therefore not eligible for refund as per provisions of notification.
Kamal Sharma on behalf of the appellant submitted that the claim of refund which was wholly consumed within SEZ cannot be denied as the Service Tax had been paid on it. He further submitted that once the Service Tax was paid to the government, the eligibility of refund could not be denied.
Nitin Ranjan, on behalf of the Revenue supported the findings recorded in the impugned order and placed reliance on the decision of this Tribunal in the matter of Everest Industries Ltd. vs. CCE Meerut.
A Single Bench of Ajay Sharma (Judicial Member) set aside the impugned order and allowed the appeal holding that various input services which were wholly consumed within the SEZ, the Service Tax paid on such services could not be denied as refund.
The Bench further observed that, “I have gone through the SEZ Act, 2005 and its section 26 (i)(e) specifically provides that all services imported into the SEZ to carry out authorised operation in SEZ shall be exempted. Further in terms of section 51 of the SEZ Act the provisions of the SEZ Act shall have overriding effect over all provisions of any other law for the time being in force and it is settled legal principle that any rule or notification cannot override the Act.”
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