The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT )allowed a refund claim of ₹2.92 crore, holding that filing under the regular notification instead of the Special Economic Zone (SEZ ) specific one was merely a procedural lapse.

Guardian India Operations Pvt Ltd, appellant-assessee, was a 100% EOU providing IT Software Services and Business Auxiliary Services to clients outside India. While offering these services from its Gurugram office, it received various input services like property rent, manpower supply, telecom, repair, and facility management, on which it paid service tax.

For the period October 2016 to June 2017, the appellant filed ST-3 returns and accumulated unutilized Cenvat credit of ₹3,00,68,912/-. A refund claim for the same was filed on 01.03.2018 under Rule 5 of the Cenvat Credit Rules, 2004, read with Notification No. 27/2012-CE. The original authority rejected the entire claim through an order dated 30.01.2019.

The assessee took the matter to the Commissioner (Appeals), who upheld the rejection of the ₹2.92 crore refund claim, stating it should have been filed under SEZ-specific Notification No. 12/2013-ST instead of Rule 5 of the CENVAT Credit Rules read with Notification No. 27/2012-CE.

The assessee aggrieved by the order appealed before the tribunal.

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The assessee counsel stated that the refund claim of ₹2.92 crore was rejected only because it was filed under the regular refund route instead of the SEZ-specific notification. He explained that the appellant, acting under a genuine belief, chose to file the claim under Rule 5 of the CENVAT Credit Rules, which applied to regular service providers.

He argued that SEZ provisions were optional and not mandatory, and choosing one route over the other was a procedural matter. He also submitted that the appellant had exported services, paid service tax, and was eligible for the refund.

The appellate tribunal referred to a past ruling in the Lupin Ltd. case, which clarified that SEZ-related benefits should be interpreted in a liberal manner, as they are meant to support tax-free operations. Since the assessee met all eligibility conditions, the CESTAT found no reason to deny the refund and set aside the order.

In short,the appeal was allowed.

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