Manpower supply to SEZ units may qualify for service tax exemption if records show consumption within the SEZ.

Manpower supply services provided to Special Economic Zone units were treated as an eligible service for exemption under Notification No. 4/2004-Service Tax, because the service was supplied to SEZ recipients and, being intangible, was considered to be consumed where the workers were engaged by those units. The adult workers register and muster roll maintained by the service recipients were identified as relevant evidence to verify actual utilisation within the SEZ. The matter was remanded for fresh consideration, with directions to examine those records before deciding eligibility for the notification benefit.

---

---

Issues: Whether manpower supply services provided to units in a Special Economic Zone qualified for exemption under Notification No. 4/2004-Service Tax, and whether the evidence produced was sufficient to establish consumption of the services within the SEZ.

Analysis: The recipients of service were SEZ units and the service provided was manpower supply service, which was an eligible service under the notification. As service is intangible, its provision and consumption occur simultaneously; therefore, where workers are employed by the SEZ units, the service is consumed within the SEZ. The appellant stated that records such as the adult workers register and muster roll maintained by the service recipients would be produced before the adjudicating authority, and such records were treated as relevant evidence for determining utilisation within the SEZ.

Conclusion: The matter was remanded to the adjudicating authority for fresh consideration, with directions to examine the adult workers register and muster roll to decide eligibility for the notification benefit.

---