Sez company service tax issue

Hello everyone,

I have some query regarding the service tax exmpt to SEZ units.
But my issue is "I provide service to a company which is in SEZ. As they come under tax exempt i do not charge service tax to them. If the company is using the service or product for own then its fine, upto this point is clear.
Now what if the company of SEZ wants to bill for the same services (serv. tax free services provided by me) to client who is outside SEZ,
1) do they have to add servic tax in the bill ?
2) If they are taking service tax from the client, do they have to pay me the serv tax aswell ?

To clarify this situation, let me give example.
Company A : IT company
Company B: SEZ company
Company C : Outside SEZ

Company A sell license & services to Company B. He does not charge service tax as Company B is in SEZ. Now Company B wants to sell same services provided by Company A to Company C, (Company A does not have any problem). Does Company B has to add service tax in the bill for company C ? If Company B is taking service tax from Company C, then is it mandatory for the Company B to pay the service tax to Company A ?

this is kind of tricky situation we are strucked at.

Important Points:

1. Taxable services received by SEZ units and SEZ developers for consumption within the SEZ were exempted from service tax vide Notification No. 4/2004 - ST dated 31-03-2004.

2. Section 51 of the SEZ Act 2005 provided that "The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act."

3. Service Tax laws provided the exemption only if sevices consumed "within SEZ". while SEZ Act overrided all the other Act.

4. But the Notification 9/2009-ST dated 03.03.2009 rescinded Notification No. 4/2004 - ST and introduced a new method of exemption for SEZ units/developers. But interestingly, instead of solving the long pending issue, the said notification dated 3.3.2009 stated that they first pay the service tax and then claim refund.

5. The new notification has expanded the scope of service received by SEZ developers or units.

Answer Of Your Example:

Company A is required to charge Service Tax in the bill.

Company B is required to claim refund of service tax paid by it towards bill of Company A.

Company B is required to charge service tax on services provided by it to Company C.