Service tax exemption_sez unit

Hi,

We provide Interior design and fitout services to SEZ units at Gandhinagar Gujarat. For past one year we have provided design and labour services to the units there. However based on the LOA from the DC our services i.e. Interior Decorators is clearly mentioned in the list of services exempted from Service tax. Based on the LOA copy. We have not charged any service tax to our clients. However while going through the new notification from July 2012, I came accros some points where it is mentined that

" for the purpose of claiming ab initio exemption, the unit of a SEZ or developer shall furnish a declaration in Form A-1, verified by the Specified Officer of the SEZ, in addition to the listspecified under condition (c); the unit of a SEZ or developer who does not own or carry on any business other than the operations in SEZ, shall declare to that effect in Form A-1"

However on every invoice billed to the client we have not received any form A1 etc. In this case, will the Central Department claim tax with intrest to us? Please advice us on the same.

Thanks,

Milind

If you read the notification carefully, it says that the SEZ unit or developer has the option to apply to the respective authority for providing such exemption to the service provider providing services to the SEZ unit. Hence, if no such declaration is there with the SEZ Unit, it is natural that you will have to charge services tax and let them claim refund.

There are two options available to them:(1) exemption to the service providers vide issuance of Form A-1 having the list of authorised operations, which you would have to verify; whether the services provided by you are covered in it or not; (2) Refund Route through which SEZ Unit would be charged service tax and refund would accordingly be claimed by the SEZ Unit.

If you don't have it then please take it, as it is a one time declaration but also check the date for that matter. In the absence of this, I think you are right; ST Department would ask for the tax+interest+penalty.