2026-VIL-1317-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Exemption under Section 26(1)(e) of SEZ Act, 2005 for services provided to SEZ unit outside the geographical limits of the SEZ - Appellant provided Cargo Handling and Steamer Agency Services to approved SEZ Unit situated at Hazira for its authorized operations including export of goods but services were physically performed at Visakhapatnam Port outside the geographical limits of the SEZ - Whether exemption from Service Tax under Section 26(1)(e) of SEZ Act read with Rule 31 of SEZ Rules 2006 is available for services rendered outside the territorial boundary of SEZ where such services are received and utilized by SEZ Unit for its authorized operations - HELD - Exemption under Section 26(1)(e) of SEZ Act cannot be denied merely because services were physically performed outside the geographical limits of SEZ. The statutory provision makes exemption available for taxable services provided to Developer or Unit for carrying on authorized operations and neither the Section nor the Rule stipulates that service must be necessarily performed within territorial boundary of SEZ - The emphasis of statute is upon identity of recipient being SEZ Unit and purpose of service utilization being authorized operations. Section 51 of SEZ Act declares that provisions of Act have effect notwithstanding anything inconsistent in any other law and therefore substantive exemption granted by parent statute cannot be curtailed by delegated legislation issued under Finance Act – Further, the exemption flows from use of service for authorized operations and not physical location where service was rendered. The Department failed to dispute identity of recipient, nature of service or their utilization for authorized operations and denial of exemption rested solely on place where services were physically rendered - Issue relates purely to interpretation and therefore extended period of limitation cannot be invoked. Demand of Service Tax is not sustainable and appeal is allowed
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