Order Date – 10 August 2023

Parties: M/s. ATC Tires Private Limited Vs Commissioner of G.S.T. and Central Excise

Facts –

• The Appellant, M/s. ATC Tires Private Limited, is a leading manufacturer of global off-highway tyres. One of its manufacturing is a Special Economic Zone (SEZ) unit and the appellant, had obtained a Letter of Approval for carrying out authorized operations of manufacturing pneumatic tyres of rubber, tyre flaps and inner tubes of rubber.
• The Joint Commissioner held that the works contract services and security services were not used in furtherance of authorized operations in the SEZ and that the impugned services were consumed outside the SEZ, while also confirming the demand insofar as renting of motor vehicle service was concerned.

Issue – 

• Whether the works contract services and security services and renting of motor vehicle services are liable to service tax?

Order – 

• The Tribunal observed that from Section 26(1)(e) that the exemption is available to carry on authorized operations in a Special Economic Zone. Clause (2) of the Notification ibid. states that the exemption shall be provided by way of refund of Service Tax paid on the specified services received by the SEZ unit or developer and used for the authorized operations.
• It is clear from the above Section as well as Notification that there is no specific mention that the services are to be consumed in a SEZ to avail the benefit of Notification No. 12/2013 ibid.
• From the documents placed on record, reveals that the services were procured for construction of toilets and repair and maintenance of school premises in the villages near their factory – as part of their Corporate Social Responsibility (CSR) activity within the meaning of Section 135 of the Companies Act, 2013.
• Thus works contract service, as undertaken above, has direct nexus with the activities of the appellant carried on in the SEZ inasmuch as the same is towards the fulfilment of CSR obligations.
• Further the location of the SEZ unit of the appellant is in a remote area, due to which they had to employ migrant labourers who did not have accommodation to stay during the period of their employment with the appellant. Therefore, the appellant had to construct dormitory where such workers / employees could be accommodated.
• The appellant has its SEZ in a remote place where security becomes necessary and therefore, they procured security services for guarding not only their factory premises, but also the dormitory which was meant for accommodating the labourers working with the appellant’s SEZ unit.
• The disputed activities, which are discussed in the above paragraphs, according to us, can never be construed as having been consumed outside the SEZ and therefore, the demand raised and confirmed cannot sustain. The appeal is allowed.