Wrongly Paid Service Tax under SEZ Act: CESTAT Remands Claim for Fresh Examination and Directs Refund [Read Order]

Recently, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at Hyderabad allowed an appeal against a part of the order of the Commissioner (Appeals), in which he had upheld the rejection of refund of Rs. 1,37,38,293/- by the refund sanction authority.

The appellant, Applabs Technologies Pvt Ltd., filed a refund application dated January 1, 2012 claiming exemption for an amount of Rs. 1,68,04,134/- in respect of specified services used with respect to authorized operations in Special Economic Zone from April, 2011 to September, 2011.

The Original Refund Sanctioning Authority examined the claim and thereafter, owing to non-compliance, the refund was rejected. On appeal, the Commissioner (Appeals) upheld the findings of the lower authority and remanded the matter back to the lower authority.

Advocate for the appellant, Narendra Dave, contested that the rejection of the amount of refund due to certain procedural omission cannot render the refund application invalid. Relying upon various judgements in support of his contention, he submitted that no substantive benefit of exemption notification can be denied on the grounds of procedural omission.

On the other hand, the respondent reiterated the findings of the Commissioner (Appeals) and submitted that the appellants have claimed the exemption without having complied with the requisites, which is essential for exemption in payment of Service Tax on authorised operations.

The Bench, comprising of Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member), was of the opinion that in absence of any specified procedure, the matter is to be examined in terms of refund application with respect to substantive provisions under the SEZ Act and Rules.

It was further stated that the services i.e. transaction fee, requires to be examined from two angles: firstly, whether it is covered under the broad category of Management Consultancy Services (MCS) and secondly, whether the same has been approved by UAC as being eligible service for use in the authorized operation of the SEZ unit.

Finally, in the interest of justice, the matter was remanded back to the original adjudicating authority, underlining the urgent need to examine the claim with respect to the relevant provisions under SEZ Act and any Service Tax paid wrongly was ordered to be refunded.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates