SEZ - Form A1 Submission requirement

[PANKAJ GROVER]

 My client is providing service to SEZ unit  which is  a stand alone unit operating only in the SEZ unit and now the confusion is whether the

 SEZ unit needs to obtain the FORM A-1 as per  the  notification 17/2011, mentioned in  point 2 (c)  to obtain the benefit of exemption

 under the said notification and after that the service provider will take that form and  will not charge service tax on there billing to SEZ unit  

or  there is no need to give the Form A-1 by such SEZ unit ?  

[sv bhasker]

Sir,

The notification no 17/2011 ST exempts services received by SEZ unit in two ways. 

1. Exemption by way of refund of service tax paid. The SEZ unit cliams refund from jurisdictional CE Authorities, after paying the tax billed to them by service provider.

2. Exemption from payment of service tax in respect of services consumed within the SEZ. These are of three types

(a) Services done for property located in SEZ and those listed in Rule 3,category(i) of Export odf Services Rules  and (b) where services are performed ie in SEZ , Rule 3 category (ii).

(c) Whether service receipent SEZ unit, does not have any other business other than in SEZ. If so give Form A-1 duly certified by the specified officer in SEZ and claim exemption from payment of Servie Tax.

So, it is important to mention the nature of service provided by your client to decide whther he is elible for refund method of exemption or straight exemption.

It may be noted that exemption is availble to authorised operations that are  duly approved only.

AI Summary

SEZ exemption: Form A-1 determines whether a unit claims direct exemption or uses the refund route for service tax. Whether a standalone SEZ unit must furnish Form A-1 to secure exemption from service tax depends on the nature of services and the authorised status of SEZ operations. Services consumed within the SEZ may be exempt either by refund after payment or by direct exemption where the unit qualifies; the latter requires a certified Form A-1 for units whose sole business is within the SEZ and applies to services performed in or for property located in the SEZ under the Export of Services Rules.