2026-VIL-1269-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Refund of service tax paid on services received by Special Economic Zone unit for authorized operations - Appellant, an SEZ unit engaged in manufacture of excisable goods, claimed refund of service tax paid on various services including payroll processing, insurance brokerage, legal consultancy, professional and consultancy charges, and construction services received during the period - Whether services used for authorized operations of SEZ unit but not wholly consumed within the SEZ are eligible for refund of service tax under Notification No. 17/2011-Service Tax - HELD - Services received by an SEZ unit for authorized operations are eligible for exemption and refund under Notification No. 17/2011-ST and Section 26(1)(e) of the Special Economic Zones Act, 2005, provided such services are used in authorized operations of the SEZ unit. The requirement of being wholly consumed within SEZ applies only to specific services as enumerated in the Explanation to the notification and does not apply to all services for which refund is claimed - The notification provides a refund mechanism for services used in authorized operations and does not impose an artificial demarcation of wholly consumed within SEZ as a condition for all services - The exemption under SEZ Act has overriding effect over the Finance Act provisions and procedural irregularities in compliance with notification requirements cannot be pressed into service to deny substantial benefits - The revenue had not contended that the impugned services were not used in authorized operations and the appellant had clearly demonstrated utilization of services in authorized operations – The refund of service tax claimed for the rejected amount is granted, the order of lower authorities denying refund on the ground of non-consumption within SEZ is set aside - The appeal is allowed
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