2026-VIL-1554-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Refund of service tax paid by SEZ units for authorized operations, Limitation prescribed under Service Tax Notification, Overriding effect of SEZ Act - Adjudicating Authority sanctioned partial refund but rejected refund relating to the earlier period on the ground that the claim was beyond the six-month period prescribed under Notification No. 9/2009-ST - The Commissioner (Appeals) set aside the rejection and allowed the refund claim - whether refund of service tax paid on services admittedly used for authorised operations of a SEZ Unit can be denied solely on the ground of limitation prescribed under Notification No. 9/2009-ST - HELD - The substantive exemption for authorized operations of Special Economic Zone units is conferred by Section 26(1)(e) of the SEZ Act 2005 and by virtue of Section 51 of the SEZ Act, the provisions of the SEZ Act have overriding effect over inconsistent provisions contained in other enactments. The exemption flowing from the SEZ Act cannot be curtailed by conditions imposed through notifications issued under other enactments. The refund arises only because service tax was paid on services which were otherwise eligible for exemption for authorized operations of the SEZ unit. Once the substantive entitlement under Section 26 is established, a procedural stipulation in the notification cannot be applied in a manner which completely defeats such entitlement - While refund claims before Departmental Authorities are ordinarily required to be processed within the statutory mechanism, such procedural requirements contained in notifications cannot be applied so as to defeat the substantive exemption available to SEZ units in respect of authorized operations - The present case is distinguishable from cases where the very entitlement to refund arises only from an exemption notification. The substantive exemption flows from Section 26 of the SEZ Act whereas the notification provides the machinery for extending the benefit by way of refund - Accordingly, the refund of service tax cannot be rejected solely on the ground that the claim was beyond the period prescribed under Notification No. 9/2009-ST - The appeal filed by the Revenue is dismissed
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