Services to SEZ Units, Service Tax

[JOHN SHANNEL]

Our company is a SEZ units. We receive services from outsiders and they claim service tax for the services provided to us. are we not exempted for service tax. Please clarify and also mention the sectioni.

 

John Shannel

Posts / Replies

[girish girish]

John,

There is no blanket exemption.  However, services which are wholly consumed in SEZ would be exempted upfront and for the other services (which are not consumed in SEZ) refund route is prescribed. 

If your service provider has charged the service tax, they you have to claim refund of the same by filing the prescribed documents and application within the time frame allowed in this regards

.

[Naveed S]

Clarification in the matter is provided under Notification No. 17/2011 – Service Tax New Delhi, the 1st March, 2011 which exempts the taxable services specified in clause (105) of section 65 of the Finance Act, chargeable to tax under section 66 or section 66A of the Finance Act, received by a Unit located in a Special Economic Zone (hereinafter referred to as SEZ) or Developer of SEZ for the authorized operations, from the whole of the service tax, education cess and secondary and higher education cess leviable thereon.

Clause (105) of section 55 contains an exhaustive list of taxable services provided/to be provided; hence all such services mentioed therein are exempt when received by a Unit located in SEZ.

 

[JOHN SHANNEL]

Thank You. But the service providers are claiming the service tax from our company. What documents should i submit inorder to stop him from claiming the service tax from us. Or please let me know if there is any option.

[Naveed S]

Please refer to Notification No. 4/2004 - ST dated 31.03.2004 regarding Exemption to services provided to a developer or units of special economic zone

Also refer to Section 26 of Special Economic Zone Act, 2005 and Rule 31 of the Special Economics Zone Rules, 2006 for further enlightment on the subject.

If the above details are not readily available or still any further clarification is needed, do let me know.

[Naveed S]

Mr.John,

Regarding your query dated 13.02.2012, it is hereby advised to claim Refund for the Serice Tax paid by your SEZ firm. The procedure for such Refund Claim is laid dowm under  notification 17/2011-ST, dated 01.03.2011. Para 3 of the said Notification is reproduced below for your ready reference :-

3. The following procedure should be adopted for claiming the benefit of the exemption contained in this notification, namely:-

(a) the Developer or Unit of a SEZ, who has paid the service tax under sections 66 of the  Finance Act shall avail the exemption by filling a claim for refund of service tax paid on specified services used for the authorised operations.

(b) the Developer or Unit of a SEZ who is registered as an assessee under the Central Excise Act, 1944 (1 of 1944) or the rules made there under, or the said Finance Act or the rules made there under, shall file the claim for refund to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the SEZ or registered office or the head office of the Developer or Unit, as the case may be, in Form A-2;

(c) the Developer or Unit of a SEZ who is not so registered under the provisions referred to in clause (b), shall, before filing a claim for refund under this notification, file a declaration with the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the SEZ or registered office or the head office of the Developer or Unit, as the case may be, in Form A-3;

(d) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after due verification, allot a service tax code number to the Developer or Unit of SEZ, referred to in clause (c), within seven days from the date of receipt of the said declaration, in Form A-3.

(e) claim for refund shall be filed, within one year from the end of the month in which actual payment of service tax was made by such developer or unit to the registered service provider or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit;

(f) the refund claim shall be accompanied by the following documents, namely:-

(i) a copy of the list of specified services as are required for the authorized operations in the SEZ, as approved by the Approval Committee; wherever applicable, document specified in 2(c), i.e. , declaration in Form A-1;

(ii) invoice or a bill or as the case may be, a challan, issued in accordance with the provisions of Finance Act  or rules made thereunder, in the name of the Developer or Unit of a SEZ, by the registered service provider, along with proof of payment for such specified services used for the authorised operations and service tax paid, in original;

(iii) a declaration by the Developer or Unit of SEZ, claiming such exemption, to the effect that—

(A) the specified services on which refund of service tax claimed, has been actually used for the authorized operations in the SEZ ;

(B) proper account of the specified services received and used for the authorised operations are maintained by the developer or unit of the SEZ and the same shall be produced to the officer

sanctioning refund, on demand.

(C) accounts or documents furnished by the Developer or Unit as proof of payment of service tax claimed as refund, based on the invoice, or bill , or as the case may be challan issued by the registered service provider indicating the service tax paid on such specified services, are true and correct in all respects;

(g) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, after verifying that,-

(i) the refund claim is complete in all respects;

(ii) the information furnished in Form A-2 and in supporting documents correctly indicate the service tax involved in the specified services used for the authorised operations in the SEZ, which is claimed as refund, and has been actually paid to the service provider, shall refund the service tax paid on the specified services;

(h) a service provider, shall provide the specified services falling under wholly consumed‘ category, under exemption granted by this notification, to a Developer or Unit of SEZ, for authorized operations, subject to the production of documents specified in sub-para (b) of para 2 and in addition wherever applicable, documents specified in sub-para (c ) para 2, i.e., declaration in Form A-1;

(i) where any refund of service tax paid on specified services is erroneously refunded for any reasons whatsoever, such service tax refunded shall be recoverable under the provisions of the said  Finance Act and the rules made there under, as if it is recovery of service tax erroneously refunded;