2026-VIL-1021-CESTAT-BLR-ST
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SERVICE TAX CESTAT Cases

Service Tax - Demand of cenvat credit of the service tax paid on the services of the 'air travel agent' provided to a SEZ Unit – Appellant rendered air travel booking services to units located in SEZ - Whether services provided to SEZ units for authorized operations are exempt from service tax under Section 26(1) of the Special Economic Zones Act, 2005, notwithstanding the provisions of the Finance Act, 1994, and whether the demand for service tax along with interest and penalties can be sustained – HELD - The services provided to SEZ units for authorized operations are exempt from service tax by virtue of the overriding effect of Section 26(1) read with Section 51(1) of the Special Economic Zones Act, 2005. The Section 26(1) of the SEZ Act confers specific exemption from service tax on taxable services provided to a developer or unit to carry on authorized operations in a Special Economic Zone. Section 51(1) explicitly provides that the provisions of the SEZ Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. The SEZ Act being a special enactment dealing with special economic zones prevails over the general provisions of the Finance Act, 1994 - The principle of law established through catena of decisions is that Section 26 is a special power of exemption under a special enactment, whereas notifications under Section 93 of the Finance Act, 1994 are general powers of exemption available to any person - In the absence of any evidence that the services do not pertain to authorized operations or were utilized for personal purposes of employees, the services must be considered as provided for authorized operations of the SEZ - The impugned order is set aside and the appeal is allowed
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