2026-VIL-1163-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Refund claims for service tax paid on input services received for authorized operations by SEZ Unit – Appellant filed refund claim after the one-year limitation period prescribed under Notification No. 40/2012-ST dated 20.06.2012 and Notification No. 12/2013-ST dated 01.07.2013. The adjudicating authority rejected the refund claims on the ground that they were time-barred - Whether the time period prescribed under Notification No. 40/2012 dated 20.06.2012 and Notification No. 12/2013 dated 01.07.2013 are mandatory in nature – HELD - The Notifications issued under the Finance Act, 1994 cannot impose restrictions or time limits on SEZ units which are not prescribed under the SEZ Rules, 2006. Section 51 of the SEZ Act gives overriding effect to its provisions over any other law. Section 26(1) of the SEZ Act specifically exempts services provided to developers and units in SEZs from payment of service tax, subject only to the manner, terms and conditions prescribed under Section 26(2) through the SEZ Rules - The GMR Aerospace Engineering Limited case, held that the exemptions granted under Section 26 of the SEZ Act are subject only to the terms and conditions prescribed in the SEZ Rules, 2006, and not to the conditions prescribed in exemption notifications issued under the Finance Act - There is no legal authority to levy service tax on services supplied to SEZ units. Therefore, exemption notifications and the conditions prescribed therein, including limitation periods, are redundant and cannot restrict or deny the refund of service tax to SEZ units. Rule 22 of the SEZ Rules, 2006 does not stipulate any limitation period for filing refund claims, and the one-year limitation prescribed in the notifications cannot be applied to SEZ units - The impugned order rejecting the refund claim on the ground of limitation is set aside. The appellant is entitled to refund of service tax paid on input services received for authorized operations. The appeal is allowed
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