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Service Tax on SEZ Unit


Hi,

Please suggest me whether we should charge service tax for telecommunication services to SEZ units as one of our client is saying that for SEZ unit no service tax will be charged on invoices.

Thanks

 

 
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Yes for SEZ service tax is exempt

 
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Thanks but my question is wheter we should add service tax on invoice or invoice without service tax will be generated in case of SEZ's

 
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Without Service Tax

 
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Chartered Accountant


The SEZ are required to get the list of services consumed within the SEZ approved. If you have the approval letter, then you need not charge the ST. Please nesure that you keep the dept. informed of the same.

 
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Chartered Accountant


In my opinion service tax needs to be charged on services provided to the SEZ. SEZ can claim this amount by way of refund. According to notification no. Notification No.9/2009-Service Tax

"2. The exemption contained in this notification shall be subject to the following conditions, namely:-

(a) the person liable to pay service tax under sub-section (1) or sub-section (2) of section 68 of the said Finance Act shall pay service tax as applicable on the specified services provided to the developer or units of Special Economic Zone and used in relation to the authorised operations in the Special Economic Zone, and such person shall not be eligible to claim exemption for the specified services:

Provided that where the developer or units of Special Economic Zone and the person liable to pay service tax under sub-section (2) of section 68 for the said services are the same person, then in such cases exemption for the specified services shall be claimed by that person;

 

(b) the developer or units of Special Economic Zone shall claim the exemption by filing a claim for refund of service tax paid on specified services"

 
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Chartered Accountant


Not 15/2009 20.5.2009 substiutes Not. 9/2009 and states that what services are consumed within the SEZ wholly the same are exempt. In the case of telecommunication it is presumably consumed fully within the SEZ and therefore wouldbe wholly exempt. However all services provided to SEZ are not exempt it mayeb noted.  

 
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Chartered Accountant


 Hi Pradeep,

If you are able to confirm that tyhe services rendered by you are wholly consumed within the SEZ by the developer or unit in SEZ, do not charge ST in the invoice. In this regard, you can obtain a undertaking from the developer or unit. Else, charge ST in the invoice

 
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Chartered Accountant


I am not able to differentiate between services which are used in relation to the authorised operations in the Special Economic Zone and services consumed wholly within the Special Economic Zone. Please explain.

 
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Chartered Accountant


There appears to be a grey area presently. Ask the customer to get a list of services approved by the revenue authority as being used for authorised operations. This would confirm the same.

Considering the type of service I think it should be presumably used for authorised operations. 

 
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