CESTAT Allows Service Tax Refund Claims of Nokia Solutions' Sriperumbudur SEZ Unit

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Nokia Solutions and Networks India Pvt. Ltd. is entitled to a refund of service tax paid on services approved for authorised operations in its Special Economic Zone unit.

The appeal was decided by Technical Member Vasa Seshagiri Rao, who set aside the rejection of refund claims totalling Rs 46.20 lakh while upholding the denial of Rs 4,220 linked to invoices raised on the company's Gurgaon unit.

Nokia operates from the SIPCOT SEZ at Sriperumbudur. It had filed five refund claims amounting to about Rs 1.48 crore. The claims are related to service tax paid on rent-a-cab services, outdoor catering, customs house agent services for domestic tariff area clearances, and security agency services.

The original authority allowed the claims in part but rejected refunds of Rs 46.20 lakh. The rejection was based on three grounds. Some services were said to not be used for authorised operations. Some services were consumed wholly within the SEZ. A small portion related to invoices issued to Nokia's Gurgaon unit.

Nokia argued that the services in dispute had been approved by the SEZ Approval Committee. It said the services were used in connection with authorised operations. It also pointed out that service tax had already been paid. On this basis, it contended that the refund could not be denied.

The department opposed the appeal. It argued that rent-a-cab and outdoor catering were staff welfare services. It said such services could not be treated as authorised operations. It also argued that security agency services consumed entirely within the SEZ were covered by unconditional exemption and therefore not eligible for refund.

On the Gurgaon invoices, it said the service recipient was the Gurgaon unit and not the SEZ unit.

The tribunal rejected the department's objections on authorised operations and consumption within the SEZ. It held that the procedural notifications governing refunds could not be used to deny the statutory benefit available to SEZ units.

However, it agreed with the department on the issue of invoices raised on the Gurgaon unit.

“There is no substance in the claim of the Appellant that they are the service recipient in respect of Services for which invoices were not raised on the Appellant. Therefore, rejection of refund claim of Rs. 4,220/- in respect of Services for which invoices were raised on Gurgaon unit of the Appellant is in order,” the bench said.

The tribunal accordingly allowed Nokia's refund claims, except for the amount linked to invoices issued to its Gurgaon unit.

For Appellant: Karthick Sundaram

For Respondent: M. Selvakumar