Applicability of service tax

[Guest]

SEZ exemption in lieu of recent notifications no.9 & 15 of 2009. It is totally not clear what position we have to take. We are doing services in the nature of architectural services from our office and also Project Management Services within the SEZ. We are charging % of fees on the works executed through our scope. Please clarify what stand we have to take on the applicability of service tax on our above two scope?

[Markesh Antony]

It is the duty of the both the parties i.e. service provider and service receiver to decide that what services are being consumed wholly withing the SEZ area or what are not. The query you have specified requires a detailed brain storming to determine the correct nature of service being provided to avail the benefit of notification no. 9/2009 as amended by notification no. 15/2009. The intention of the government is clear but it is again expected from the government that to formulate the guidelines and procedures to avoid the difficulties being faced by the SEZ units and service providers like the situation described in the query.

AI Summary

SEZ service tax applicability depends on whether services are consumed wholly within the SEZ to claim exemption. Applicability of service tax to services from an SEZ depends on whether services are consumed wholly within the SEZ and thus eligible for exemption. The two contested categories-architectural services provided from the SEZ office and project management services charged as a percentage of fees on executed works-must be characterized by place of consumption. Both provider and recipient share responsibility to establish consumption within the SEZ to claim exemption under the relevant notifications; lack of administrative guidelines means fact-specific analysis and documentation are necessary.