Order dated 01 September 2022

Fact 

• The appellant, eClerx Services Limited, during June 2009 and February 2011 had rendered ‘taxable service' in accordance with notification no. 9/2009-ST dated 3.3.2009, claimed as a refund thereafter upon compliance with the conditions specified therein.
• It was alleged that the appellant herein, for the period from 1st July 2012 to 31st March 2013 had availed of exemption against form A-I which, having been dated only on 29th August 2012, precluded the privilege between 1st July 2012 and 28th August 2012 during which taxable service rendered without discharging liability.
• Further, proportionate contribution of expenditure had been charged from their several subsidiary enterprises which was held to be consideration for rendering of ‘business auxiliary service’ within India on which liability had not been discharged. 
• The recovery of liability was ordered on account of breach of condition in the respective notifications embodying the procedure by which the appellant could have availed exemption from service tax on supply of services to units in special economic zones (SEZ) 

Issue 

• Whether the notifications relied upon by the adjudicating authority can invalidate exemption? 

Order 

• The Tribunal observed it is unquestionably clear from section 51 of Special Economic Zones Act, 2005 that no other law can prevail over it. It is on record that the required documentation was not available for the entire period of the dispute but, at the same time, it cannot be denied that at some point, the eligibility did exist. The procedural infirmities, for a shorter or longer time, does not in any way supplant the exemption accorded to the impugned supply of services.
• The Tribunal relied on the decision of the Hon’ble High Court Telangana and Andhra Pradesh in GMR Aerospace Engineering Limited v. Union of India & others [2019-VIL-489-TEL] and held that as breach of conditions being procedural, demand pertaining to the rendering of services to M/s Credit Suisse Service is set aside.
• Further, in respect to the other issue, it was observed that Special Economic Zones Act, 2005 is substantially different from that in the rules which delineate ‘exports’ from ‘domestic supply’ in the scheme of service tax law and, in view of section 51 of Special Economic Zones Act, 2005, have to be read in the context of the exemption afforded by section 26 of Special Economic Zones Act, 2005 and not in terms of Finance Act, 1994. 
• Consequently the prism through which the adjudicatory perception has been enunciated does not apply to the facts of the service rendered by the appellant. 
• Accordingly, the demand for allegedly rendering of services within India does not sustain. Hence set aside impugned order and appeal allowed.