Rent-a-cab services provided to a unit located in SEZ for transportation of employees to and from their residences located outside SEZ, are eligible for exemption from Service tax
ORIX Auto Infrastructure Services Ltd. Vs. Commissioner of Service Tax [2015 (64) taxmann.com 21 (Mumbai – CESTAT)]
ORIX Auto Infrastructure Services Ltd.(“the Appellant”) has provided rent-a-cab services to a unit located in Special Economic Zone (“SEZ”) for transportation of employees to and from their residences located outside SEZ. The Appellant has paid Service tax thereon by mistake and claimed refund thereof on the ground that the services were eligible for exemption under Notification 4/2004-ST dated March 31, 2004 (“the Exemption Notification”). However, the Department denied exemption/refund claim on ground that the services were not consumed within SEZ.
The Hon’ble CESTAT, Mumbai relied upon the judgment in the case of Norasia Container Lines Vs. CCE [2012 (21) taxmann.com 370 (New Delhi – CESTAT)], wherein it was held that Section 26 of the Special Economic Zones Act, 2005 (“SEZ Act”) read with Rule 31 of the Special Economic Zones Rules, 2006 (“SEZ Rules”) ibid provides exemption from Service tax on taxable services provided to a Developer or Unit to carry on the authorised operations in a SEZ & IntasPharma Ltd. Vs. CST [2013(38) STT 533 = 30 taxmann.com 166 (Ahd. – CESTAT)], wherein it was held that on the harmonious construction, the immunity to Service tax provided under Section 7 or 26 of the SEZ Act cannot be so interpreted as to be eclipsed by the procedural prescriptions of Notification No. 9/2009-ST dated March 3, 2009 or Notification No. 15/2009-ST dated May 20, 2009.
In the instant case, the Appellant has rendered rent-a-cab services for transportation of employees of a unit situated in SEZ. Hence, from the above, it was held that the Impugned service is exempt from Service tax.
It is pertinent to note here that, at present, Notification No. 12/2013-ST dated July 1, 2013 deals with the provisions pertaining to exemption on services provided to a developer or units of SEZ and thereby all the previous Notifications are rescinded.