Manpower Service Provided in SEZ

[Guest]

Dear Sir,

I am manpower service provider in SEZ, and i am providing service in only in SEZ and 100% of my service is consumed in SEZ since 2011. Because i was proving service in SEZ and in SEZ it is Exempted so i never charged service tax and i was not registered in service tax. In 2013 service tax produced a notification according to the notification i registered in service tax and taken form A-2 from my client for exemption. i want to know is there any recovery can be raise for the period of 2011-13. if yes then who will be liable to pay as i had not charged service tax.

Please suggest,

thanks

[Ganeshan Kalyani]

Sir in my view it is export of service hence no service tax. Thanks.

[KASTURI SETHI]

Sh.Bhuvanesh Dalawat Ji,

I endorse the views of SH.Ganeshan Kalyani, Sir. Prior to the issuance of Notification No.12/13-ST, Notifications No.17/11-ST dated 1.3.11 and 40/12-ST dated 20.6.12. There is procedure lapse on your part and maximum penalty imposable is ₹ 10,000/- under Section 77 (b) of the Finance Act,1994. No demand can be raised as service provided to SEZ amounts to export of service as rightly advised by Sh.Ganeshan kalyani, Sir.

[Guest]

Dear KASTURI SETHI Sir and Ganeshan Kalyani Sir,

Thank you for your suggestions.

[Ganeshan Kalyani]

Welcome Sir. Your acknowledgment of satisfaction is a Pats to us. Thanks. Welcome again sir.

[KASTURI SETHI]

Really if querist is satisfied and responds back, we feel encouraged. It will inspire other querists.

[Guest]

Dear Sir,

Actually your advice is useful, and i have studied rule for export of service and it is differ what you have advised. so i am in confusion. still my question is what if any liability raise for the year 2011-12 and 12-13. and one more thing there is contradictory in rules of SEZ and service tax.

Regards,

Bhuvanesh Singh

[Ganeshan Kalyani]

Sir, I the Notification No. 12/2013-ST, the requirement of furnishing of Exemption certificate as received by SEZ from the Central Excise Department to the provider of service is mentioned. However I could not find such requirement in the other Notifications as quoted by Sri Kasturi Sir. This it is inferred that the requirement of having such exempion certificate by the provider of service in during the period under question is not warranted. This is my view. Thanks.

[KASTURI SETHI]

Prior to 1.4.15, provider of Manpower Service was required to pay 25% and Service Receiver was required to pay 75% in terms of Notification No.30/12-ST dated 20.6.12 effective from 1.7.12. And from 1.4.15, 100% liability was shifted to service receiver vide notification No.7/15-ST dated 1.3.15 (effective from 1.4.15).

You are worried about the period 2011-12 and 2012-13. During these period there was option not to pay ST instead of first depositing ST and then claiming refund. Strictness regarding following proper was imposed upon from 1.4.13. Govt. of India is very liberal regarding export of service. Service provided to SEZ unit is export of service and no ST can be demanded. You are unnecessarily worried. do not be afraid by verbal queries from the Officers of the department. Get in writing what they want to say. It is phobia and nothing else.

On what basis you are confused. On what basis you say it is not export of service. Let me know the basis of your confusion. Thereafter I shall convince you.

[Guest]

Thank you sir for your kind advice, whenever i get notice i will definitely contact you sir.

[KASTURI SETHI]

Sh.Bhuvanesh Dalawat Ji,

I am hopeful that you will not receive any notice for demand of ST. Pl. do not deposit any amount of ST or penalty on verbal orders.Get in writing.

[Guest]

OK sir.

[Guest]

Dear Sirs,

As Per your advice i have not paid any service tax or penalty till now. On Monday i was received call from service tax and i meet with AC of service tax, he told me that for the year 2011-12, you have no liability but for 2012-13 you are liable. and he suggested that if i have any case law or any strong point to drop this case i can submit in this week,otherwise he will give Show Cause Notice to me.

He told me As per service tax notification no.40/2012 issued on 20/05/2012 Form A1 is necessary for exemption and i do not have such form. After 2013 i have no liability and i have all documents

Sir can you please help me to give any case law or any act that can prove that this is export of service and exempted.

Regards,

Bhuvanesh Singh

AI Summary

Export of service: manpower supplied to SEZ treated as exempt from service tax, subject to procedural documentation and penalty risk. Manpower supplied to a SEZ is treated as export of service and generally exempt from service tax, but notifications during 2011-2013 altered procedural requirements and introduced exemption certificate/form obligations; failure to hold prescribed documentation may prompt tax authorities to question exemption claims. Liability for payment shifted between provider and receiver under different notifications, procedural compliance tightened from a later date, and non compliance can attract demand and limited penalties; practitioners should preserve documentary proof of export treatment and obtain written reasons from authorities before making payments.