Hello All,
This is on service tax assessment in the case of entities with an SEZ unit and another non SEZ unit.
We have an existing company working out of an SEZ, which as all would know enjoys "exemption" from payment of service tax on listed services. Now we plan to form a branch of the company, outside the SEZ, which will be generating export revenue.
While one entity will operate on service tax exemption method, the other one will be working on refund method.
As I understand the branch will have to maintain separate books of accounts, banks etc. The branch will also have many separate service providers such as rent, internet and telephone, professional contractors etc....which can be separately identified.
There will also be some common services (on a single invoice) such as professional charges to auditors/tax consultants, advisors, insurance charges, interest on borrowings, travel charges of senior management etc
Questions
1. What is the process (as acceptable by the service tax department) for claiming the input credit of service tax? Meaning, do we claim that the services are exempted if billed to the SEZ unit and hence the vendor invoice is paid less service tax? OR The service tax is paid for the common services and then claimed refund (since all revenue is from exports).
2. What is the method acceptable to the service tax department for allocation of such common services (between SEZ Unit and outside branch) and hence service tax component?
3. Is claiming refund from service tax department possible? Meaning, even if we make a claim for refund, does the service tax department pay the refund monies? How is the assessment experience? Is it a headache?
4. Does anybody have an experience on such cases? Single corporate entity with 2 (or more)units, one in SEZ (in one state) and other in local area (in a different state) on service tax. If yes, appreciate if one could explain the issues (on service tax) faced in bookkeeping, payment of tax, claiming credit, filing returns, method of allocation and assessments.
Regards
Sreekanth
CAclubindia
