Case Note & Summary
The petitioner, Sai Wardha Power Company Limited, a power generating unit in the Special Economic Zone (SEZ) at Warora, filed a writ petition seeking a direction to the Deputy Commissioner of Customs, Central Excise & Service Tax, Chandrapur to issue authorization in Form A2 and a declaration that it is entitled to ab initio exemption from service tax under Notification No.12 of 2013. The petitioner had applied for authorization on 30.04.2013, but the Approval Committee approved the list of services only on 24.09.2013. The respondents contended that exemption could only be from the date of approval. The court examined the notifications and held that the condition of obtaining authorization is procedural and not a condition precedent for exemption. The court directed the respondents to issue Form A2 within two weeks and declared that the petitioner is entitled to ab initio exemption from the date of application, i.e., 30.04.2013. The petition was allowed with no order as to costs.
Headnote
A) Service Tax - SEZ Exemption - Ab Initio Exemption - Notification No.12 of 2013 - The petitioner, an SEZ unit, sought ab initio exemption from service tax. The court held that the exemption is available from the date of application for authorization, not from the date of approval by the Approval Committee, as the condition of obtaining authorization is procedural and not a condition precedent for exemption. (Paras 2-9)
B) Service Tax - SEZ Exemption - Authorization in Form A2 - The court directed the respondent to issue Form A2 authorization to the petitioner within two weeks, as the petitioner had complied with all conditions and the delay in approval was not attributable to the petitioner. (Paras 8-9)
Issue of Consideration
Whether the petitioner is entitled to ab initio exemption from service tax under Notification No.12 of 2013 from the date of application or from the date of approval of the list of services by the Approval Committee.
Final Decision
The petition is allowed. The respondents are directed to issue Form A2 authorization to the petitioner within two weeks. It is declared that the petitioner is entitled to ab initio exemption from service tax under Notification No.12 of 2013 from the date of application, i.e., 30.04.2013. Rule made absolute with no order as to costs.
Law Points
- ab initio exemption
- service tax
- SEZ
- Notification No.12 of 2013
- Form A2
- authorization
- Special Economic Zones Act 2005
- refund mechanism
- condition precedent
Case Details
2015 LawText (BOM) (07) 183
Writ Petition No.5125 of 2014
Smt. Vasanti A. Naik, Prasanna B. Varale
Mr. S. P. Dharmadhikari, Sr.Counsel with Mr.C.S.Dharmadhikari for petitioner; Mr. Rohit Deo, ASGI for respondent No.1; Mr.F. T. Mirza for respondent Nos.2 and 3
Sai Wardha Power Company Limited
Union of India, Deputy Commissioner of Customs, Central Excise & Service Tax, Chandrapur, Commissioner of Customs, Central Excise & Service Tax, Nagpur
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Nature of Litigation
Writ petition seeking direction to issue authorization in Form A2 and declaration of entitlement to ab initio exemption from service tax.
Remedy Sought
Direction to respondent No.2 to issue Form A2 authorization and declaration that petitioner is entitled to ab initio exemption from service tax under Notification No.12 of 2013.
Filing Reason
Respondent No.2 failed to issue Form A2 authorization despite petitioner's application dated 30.04.2013 and approval by Approval Committee on 24.09.2013.
Issues
Whether the petitioner is entitled to ab initio exemption from service tax under Notification No.12 of 2013 from the date of application or from the date of approval of the list of services by the Approval Committee.
Submissions/Arguments
Petitioner argued that it had applied for authorization on 30.04.2013 and the Approval Committee approved the list on 24.09.2013, but respondent No.2 did not issue Form A2. The exemption should be from the date of application.
Respondents contended that exemption can only be from the date of approval by the Approval Committee, as authorization is a condition precedent.
Ratio Decidendi
The condition of obtaining authorization under Notification No.12 of 2013 is procedural and not a condition precedent for exemption. The exemption is available from the date of application for authorization, as the delay in approval by the Approval Committee cannot be attributed to the petitioner.
Judgment Excerpts
By this petition, the petitioner Sai Wardha Power Company Limited, Warora seeks a direction to the respondent No.2 Deputy Commissioner, Customs, Central Excise & Service Tax, Chandrapur to forthwith issue the authorization in Form A2 to the petitioner.
A declaration that the petitioner is entitled to avail the benefit of ab initio exemption from service tax in terms of Notification No.12 of 2013 is also sought.
The condition of obtaining authorization is procedural and not a condition precedent for exemption.
Procedural History
The petitioner filed Writ Petition No.5125 of 2014 before the Bombay High Court, Nagpur Bench, seeking direction to issue Form A2 authorization and declaration of entitlement to ab initio exemption. The petition was heard finally with consent of parties and allowed on 14.07.2015.
Acts & Sections
- Special Economic Zones Act, 2005:
