1. This appeal is filed by the Revenue against Order-in-Original No. 13/ST/HB/12-13, dated 2-11-2012 passed by the Commissioner of Service Tax (Adjudication), Mumbai. Respondent-assessee has filed cross-objection. Both the appeal and the cross-objection are disposed of by a common order. Heard both the sides and perused the records.
2. Revenue is aggrieved by the said order-in-original on the ground that the adjudicating authority has dropped proceedings initiated by the show cause notice without considering the facts of the case properly.
3. The relevant facts that arise for consideration are that the respondent herein was awarded a contract by M/s. Lloyds Insulation Ltd. for erecting/providing services to SEZ developer. Respondent had been awarded the contract based upon the contract awarded by M/s. Reliance Industries Ltd., being a SEZ developer, M/s. Reliance Industries Ltd. directed M/s. Lloyd Insulation Limited to render services of 'commercial or industrial construction services'. The said Lloyds Insulation Limited directed the appellant to do a part of the contract. During the material period in question, respondent were registered with the service tax authorities under the category of 'Commercial or Industrial Construction Service' and undertook the painting and various other related job in the SEZ which is developed by RIL. The respondent had during the relevant period sought clarification from the departmental officers and subsequently claimed benefit of Notification No. 4/2004-S.T., on the ground that they rendered the services to SEZ developer and in SEZ. During the course of audit it was noticed by the audit team that the respondent is not eligible for the benefit of Notification No. 4/2004-S.T. for the reason that he was a sub-contractor and was never awarded a contract by SEZ developer. Adjudicating authority, after following the due process of law, dropped the proceedings initiated.
4. After hearing both the sides, we find that the main ground of the appeal of the Revenue is that the respondent had never provided services directly to the SEZ unit but was contracted as a sub-contractor to provide services to a unit in SEZ. Hence, the benefit of Notification No. 4/2004-S.T. is not applicable. It is undisputed that during the period 1-4-2005 to 31-3-2009 the respondent had rendered various services to the unit situated in SEZ and being developed by the SEZ developer. It is also undisputed that appellant was a sub-contractor. On this factual matrix, we have to now consider the Notification No. 4/2004-S.T. which reads as under:
"Service tax exemption to services provided to a Developer or units of Special Economic Zone -- Notification No. 17/2002-S.T. superseded.
In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) and in super session of the notification of the Government of India in the erstwhile Ministry of Finance and Company Affairs (Department of Revenue), No. 17/2002-Service Tax, dated 21-11-2002, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 21-11-2002, vide, G.S.R. 777(E), dated 21-11-2002, except as respects things done or omitted to be done before such super session, the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts taxable service of any description as defined in clause (90) of sub-section (1) of section 65 of the said Act provided to a developer of Special Economic Zone or a unit (including a unit under construction) of Special Economic Zone by any service provider for consumption of the services within such Special Economic Zone, from the whole of service tax leviable thereon under section 66 of the said Act, subject to the following conditions, namely:-
(i) the developer has been approved by the Board of Approvals to develop, operate and maintain the Special Economic Zone;
(ii) the unit of the Special Economic Zone has been approved by the Development Commissioner or Board of Approvals, as the case may be, to establish the unit in the Special Economic Zone;
(iii) the developer or unit of a Special Economic Zone shall maintain proper account of receipt and utilisation of the said taxable services.
Explanation. - For the purposes of this notification, -
(1) "Board of Approvals" means the combined Board of Approvals for export oriented unit and Special Economic Zone units, as notified in the Official Gazette, from time to time by the Government of India in the Ministry of Commerce and Industry;
(2) "developer" means a person engaged in development or operation or maintenance of Special Economic Zone, and also includes any person authorised for such purpose by any such developer;
(3) "Special Economic Zone" means a zone specified as Special Economic Zone by the Central Government in the notification issued under clause (iii) of Explanation 2 to the proviso to sub-section (1) of section 3 of the Central Excise Act, 1944 (1 of 1944)."
5. It can be seen from the above reproduced notification that the said notification exempts any taxable service provided by any service provider for consumption of the service within a Special Economic Zone, subject to following/adhering to the conditions. It is also undisputed that all the conditions mentioned in the notifications are satisfied by the SEZ developer i.e. M/s. Reliance Industries Ltd. On the face of such factual matrix, we find that the adjudicating authority was correct in coming to the conclusion that the proceedings initiated by show cause notice issued needs to be dropped. We also find as regards taxability of the service rendered to the SEZ developer was in dispute before this Tribunal in the case of Sujana Metal Products Ltd. v. Commissioner of Central Excise : 2011 (273) E.L.T. 112 (Tri.-Bang.) and this T
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ribunal came to a conclusion that where the services are rendered to SEZ or a unit in SEZ, as long as it is rendered for consumption in a Special Economic Zone, the services are exempt. We also note that the provisions of Section 26 of the Special Economic Zone overrides provisions of other law and exempts any services or taxes if the same are consumed in Special Economic Zone. In view of the foregoing and the authoritative judicial pronouncement, we find no merits in the appeal filed by the Revenue and the same stands rejected and hold impugned order is correct and legal and does not require any interference, cross-objection is also disposed of.