Refund of Service Tax on Outdoor Catering to SEZ unit under Notification 12/2013

[Sanketh Meri]

Dear All,

We are an SEZ unit receiving Outdoor catering services on which service tax is charged. The Caterer is providing food at the dormitory outside Sez unit to all employees brought from villages. All employees staying at dorm are from villages and catering of food is an essential facility to be provided to employees without which they will not come and stay in the dorm. As it is a commercial compulsion and welfare activity, whether refund of service tax on such catering service can be claimed under Notification12/2013 read with SEZ Act and Rules (ie Section 7 & 26 read with Rule 27(3) and 31)?

The service tax authorities are not allowing this under Rule 27(3) of Sez Act.

Please provide your comments on the same

AI Summary

Export of service: catering to SEZ unit employees outside the zone may qualify for service tax refund under SEZ exemption rules.
Whether service tax on outdoor catering supplied to an SEZ unit's employees at a location outside the zone is refundable under Notification 12/2013 and the SEZ Act; advisers assert such catering amounts to export of service under Section 7 of the SEZ Act and so is eligible for exemption/refund, and administrative denials invoking Rule 27(3) may be contested by appeal if a written order is passed.