My client is providing service to SEZ unit which is a stand alone unit operating only in the SEZ unit and now the confusion is whether the
SEZ unit needs to obtain the FORM A-1 as per the notification 17/2011, mentioned in point 2 (c) to obtain the benefit of exemption
under the said notification and after that the service provider will take that form and will not charge service tax on there billing to SEZ unit
or there is no need to give the Form A-1 by such SEZ unit ?
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The notification no 17/2011 ST exempts services received by SEZ unit in two ways.
1. Exemption by way of refund of service tax paid. The SEZ unit cliams refund from jurisdictional CE Authorities, after paying the tax billed to them by service provider.
2. Exemption from payment of service tax in respect of services consumed within the SEZ. These are of three types
(a) Services done for property located in SEZ and those listed in Rule 3,category(i) of Export odf Services Rules and (b) where services are performed ie in SEZ , Rule 3 category (ii).
(c) Whether service receipent SEZ unit, does not have any other business other than in SEZ. If so give Form A-1 duly certified by the specified officer in SEZ and claim exemption from payment of Servie Tax.
So, it is important to mention the nature of service provided by your client to decide whther he is elible for refund method of exemption or straight exemption.
It may be noted that exemption is availble to authorised operations that are duly approved only.