Input credit of Service Tax in case of services provided to SEZ area

[Mehul Pandya]

Sir,

We are providing Technical Services to the different clients. Some clients are located in SEZ area and they have told us not to charge service tax to them against A-1 form. In this case can we avail input service tax credit against the services provided in the SEZ area. Please suggest is there is any way out to take cenvat credit otherwise we have to bear loss of service tax portion.

[Mahir S]

Yes Sir, you can avail such cenvat credit for services provided in the SEZ area.

Such provision is already available in the credit rules, so there shall not be any loss of service tax credit.

[Mehul Pandya]

Thank you for your reply,

Can you please suggest any notification,circular or case laws favoring the same.

[Rajesh Nathoo]

Dear Mehul ,

Please go through sub rule (6A) of Rule 6 of Cenvat Credit Rules, 2004

The provisions of sub rules 1,2,3,4 shall not be applicable in case taxable services are provided without payment of Service Tax to a unit in SEZ ...............

[Mahir S]

Yes, you can avail input service credit against services provided in the SEZ area, as explained above.

AI Summary

Service Providers Can Avail Input Tax Credit for SEZ Services Under Rule 6(6A) of Cenvat Credit Rules 2004 A service provider inquired about availing input service tax credit for services provided to clients in a Special Economic Zone (SEZ), who requested not to be charged service tax. A respondent confirmed that input service tax credit can be availed under existing credit rules, preventing any loss of service tax credit. Another participant referenced sub-rule (6A) of Rule 6 of the Cenvat Credit Rules, 2004, which allows for taxable services to be provided without service tax payment to SEZ units. The original inquirer sought further information on relevant notifications or case laws supporting this provision.