SEZ Service Tax Exemption Cannot Be Denied for Late Submission of Forms A-1 and A-2: CESTAT Ahmedabad Ruling

Case Reference

Neeraj Insulation Contractors Vs Commissioner of C.E. & S.T. (CESTAT Ahmedabad)
Order Pronounced: 15.10.2024

Background of the Case

This case arose from service tax proceedings initiated against an insulation contractor who had rendered hot and cold insulation services, along with allied associated services, to Special Economic Zone units during the financial years 2013-14 and 2014-15. Specifically, the services were provided to ONGC Petro Additions Limited on behalf of Samsung Engineering Co. Ltd., both of which were SEZ units situated at Dahej.

The assessee did not discharge service tax on these services, claiming the benefit of exemption under Notification No. 40/2012-ST dated 20.06.2012 and Notification No. 12/2013-ST dated 01.07.2013, which provide relief from service tax on taxable services rendered to SEZ developers and units for authorised operations.

Key Fact: At no point during the proceedings was it disputed that the services were actually provided to and consumed by SEZ units for their authorised operations.

How the Dispute Originated

A Show Cause Notice dated 29.05.2017 was issued to the assessee, proposing recovery of service tax by denying the exemption benefit. The basis for denial was that the assessee had provided services to Samsung Engineering Co. Ltd., Dahej SEZ, without obtaining the requisite authorisation from the competent authority in Form No. A-1/A-2, as mandated under the relevant exemption notifications.

In response, the assessee filed a detailed reply on 18.07.2017, supported by comprehensive documentary evidence, including:

  • Copy of the contract dated 21.11.2013 between Samsung Engineering Co. Ltd., Dahej SEZ and the assessee
  • Copy of letter of intent dated 21.03.2013
  • Inspection reports pertaining to the work executed
  • Copies of invoices raised
  • Form No. A-1 issued by ONGC Petro Additions Limited, describing the services to be availed under Notification No. 40/2012 dated 20.06.2012, along with details of the DTA service provider
  • Form No. A-2 certified by the Deputy Commissioner of Central Excise and Customs
  • Judicial precedents from various Tribunals, High Courts, and the Supreme Court

Despite this voluminous documentation, the Adjudicating Authority, vide Order-in-Original dated 17.01.2018, confirmed the service tax demand without adequately considering the evidence or the judicial precedents cited by the assessee.

Commissioner (Appeals) Order

Aggrieved by the order of the Adjudicating Authority, the assessee preferred an appeal before the Commissioner (Appeals). However, the first appellate authority also rejected the appeal, sustaining the denial of exemption on the same ground — that the assessee had provided services to Samsung Engineering Company Limited, Dahej SEZ, without being covered by proper authorisation in Form No. A-2.

Left with no relief at either level, the assessee approached the CESTAT Ahmedabad.

Arguments Advanced by the Assessee

Learned Counsel Shri Mrugesh Pandya, appearing on behalf of the assessee, placed the following submissions before the Tribunal: