SERVICE TAX EXEMPTED FOR SPECIAL ECONOMIC ZONES (SEZ)
Notification
no – 12/2013
Dated:
1st July 2013
The Central Government, on being satisfied that it is necessary in
the public interest so to do, hereby exempts the services on which service tax
is leviable under section 66B of the said Act, received by a unit located in a Special Economic Zone (hereinafter referred to as SEZ Unit) or Developer of SEZ (hereinafter referred to
as the Developer) and used for the authorized operation
from the whole of the service tax, education cess, and secondary and higher education cess leviable thereon.
The exemption shall be provided by way
of refund of service tax paid on the specified services received by the SEZ
Unit or the Developer and used for the authorized operations:
Provided that where the specified services received by the SEZ Unit
or the Developer are used exclusively for the authorized operations,
the person liable to pay service tax has the option not to pay the service
tax ab initio, subject to the conditions and procedure as
stated below.
This exemption shall be given effect to
in the following manner:
(I) The
SEZ Unit or the Developer shall get an approval by the Approval Committee of
the list of the services as are required for the authorized operations (referred to as the
‘specified services’ elsewhere in the notification) on which the SEZ Unit or
Developer wish to claim exemption from service tax.
(II) The ab-initio exemption on the specified services
received by the SEZ Unit or the Developer and used exclusively for the authorised operation shall be allowed subject to
the following procedure and conditions, namely:-
(a) the SEZ Unit
or the Developer shall furnish a declaration in Form A-1, verified by the Specified Officer of
the SEZ, along with the list of specified services in terms of condition (I);
(b) on the basis of
declaration made in Form A-1, an authorisation shall be issued by the jurisdictional
Deputy Commissioner of Central Excise or Assistant Commissioner of Central
Excise, as the case may be to the SEZ Unit or the Developer, in Form A-2;
(c) the SEZ Unit or the Developer shall provide a copy of said authorisation to the provider of specified services. On the basis of the
said authorisation, the service provider shall provide the specified services
to the SEZ Unit or the Developer without payment of service tax;
(d) the SEZ Unit or the Developer shall furnish
to the jurisdictional Superintendent of Central Excise a quarterly statement,
in Form A-3, furnishing the details
of specified services received by it without payment of service tax;
(e) the SEZ Unit or the Developer shall
furnish an undertaking, in Form A-1, that in case the specified services on
which exemption has been claimed are not exclusively used for authorised operation or were found not to have
been used exclusively for authorised operation,
it shall pay to the government an amount that is claimed by way of exemption
from service tax and cesses along
with interest as applicable on delayed payment of service tax under the
provisions of the said Act read with the rules made there under.
(III) The
refund of service tax on (i) the specified services that are not exclusively
used for authorised operation, or (ii) the specified
services on which ab-initio exemption
is admissible but not
claimed, shall be allowed subject to the following procedure and conditions,
namely:-
(a) the service
tax paid on the specified services that are common to the authorised operation in an SEZ and the operation
in domestic tariff area [DTA unit(s)] shall be distributed amongst the SEZ Unit
or the Developer and the DTA unit (s) in the manner as prescribed in rule 7 of
the Cenvat Credit Rules. For the purpose of distribution, the turnover of the
SEZ Unit or the Developer shall be taken as the turnover of authorised operation during the relevant period.
(b) the SEZ Unit
or the Developer shall be entitled to refund of the service tax paid on (i) the
specified services on which ab-initio exemption
is admissible but not claimed,
and (ii) the amount distributed to it in terms of clause (a).
(c) the SEZ Unit or Developer who is registered as an assessee under the Central Excise Act, 1944 (1
of 1944) or the rules made there under, shall file the claim for refund to the
jurisdictional DC of Central Excise or AC of Central Excise, as the case may
be, in Form A-4;
(d) the amount
indicated in the invoice, bill or, as the case may be, challan, on the basis of which this refund is being claimed, including the
service tax payable thereon shall have been paid to the person liable to pay
the service tax thereon, or as the case may be, the amount of service tax
payable under reverse charge shall have been paid under the provisions of the
said Act;
(e) the claim for refund shall be filed within 1 year from the end of the month in which actual payment of
service tax was made by such Developer or SEZ Unit to the registered service provider or such extended period as the AC
of Central Excise or the DC of Central Excise, as the case may be, shall
permit;
(f) the SEZ Unit or the Developer shall submit only one claim of refund under
this notification for every quarter
(g) the SEZ Unit or the Developer who is not so registered under
the provisions referred to in clause (c), shall, before filing a claim for
refund under this notification, make an application for registration under rule
4 of the Service Tax Rules, 1994.
(h) if there are more than one SEZ Unit registered under a common service tax registration, a common
refund may be filed at the option of the assessee.
(IV) The SEZ Unit or Developer, who intends to avail exemption or
refund under this notification, shall maintain proper account of receipt and
use of the specified services, on which exemption or refund is claimed, for authorised operations in the SEZ.
Where any sum of service tax paid on specified services is erroneously
refunded for any reason whatsoever, such service tax refunded shall be
recoverable under the provisions of the said Act and the rules made there
under, as if it is recovery of service tax erroneously refunded.
Notwithstanding anything contained in this notification, SEZ
Unit or the Developer shall have the option not to avail of this exemption and
instead take CENVAT credit on the specified services in accordance with the
CENVAT Credit Rules, 2004.
Regards
CA. Mona Singhal
Partner
Arpit Gupta & Associates
Chartered Accountants
701, Nirmal Tower,
26, Barakhamba Road,
Connaught Place, Delhi-110001
Mobile:- +91-9873082769
Website: www.caaga.co.in
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