Trade Notice No.09 /2011 – Service Tax/SH.
the 2nd June, 20111
Subject: SEZ –
Service Tax Refund -- regarding.
Attention of the
members of Trade, Industry and all other concerned are here by invited to
the Board’s Circular No.142/11/2011-ST issued vide F.No.354/30/2011-TRU
dated 18th May, 2011 wherein TRU has clarified on the doubts
raised subsequent to the issuance of Notification 17/2011-ST dated
01-03-2011. These doubts and clarifications are as follows :
the refund arising out of service tax paid under section 66A, no
proforma is prescribed in the notification; how to claim it?
notification, there is no difference in treatment of service tax
paid under section 66 and section 66A of Finance Act, 1994. Where
refund arises, Table – A, in Form A-2 can be used for making a
(i) In the
notification, what is the treatment for service tax paid on taxable
services which do not fall in the category of “wholly consumed
services”, and also are not ‘shared services’ ? Is refund available?
Whether in the case of category (iii) services referred in paragraph
2(a) of the notification, ‘proportionate refund’ applies to only
‘shared services’ i.e. services that are used both for SEZ (Special
Economic Zone) authorised operations as well as DTA (Domestic Tariff
services (under section 66 or section 66A) received by a SEZ
Unit/Developer for the authorised operations, have been exempted in
the first paragraph of notification 17/2011-ST, subject to
Paragraph 2, conditions attached to this exemption are prescribed.
In terms of paragraph 2(a), refund route is the default option for
all who intend to claim the exemption granted by the notification in
its first paragraph. However, an exception is provided in the form
of ab initio (upfront) exemption, to the ‘wholly consumed’
which fall outside the definition of ‘wholly consumed’ services can
be categorized as those which are used exclusively by the SEZ
Unit/Developer, for the authorised operations in SEZ or shared with
of the notification is applicable to refund arising from ‘shared
services’ only. Thus exemption to services exclusively used for the
authorised operations of SEZ Unit/Developer, will continue to be
available by way of refund, as specified in paragraph 2(a) itself,
subject to other conditions. To claim this refund, Table-A, provided
in Form A-2 may be used.
clarified that only such services shall be considered as exclusively
used by SEZ Unit/Developer, for the authorised operations, as they
satisfy the following criteria:
Invoice is raised in the name of the SEZ Unit/Developer or in the
invoice, it is mentioned that the taxable services are supplied to
the SEZ Unit/Developer for the authorised operations;
services are approved by the ‘Unit Approval Committee(UAC)’, as
required for the authorised operations;
Receipt and use of such services in the authorised operations are
accounted for in the books of accounts of the SEZ Unit/Developer.
the expression ‘who does not own or carry on any business other
than the operations in the SEZ’ appearing in paragraph 2(a)(iii)
of the notification, which creates a difference between ‘standalone’
and ‘non-standalone’ SEZ Unit/Developer, may be clarified.
expression refers to an entity which is carrying out business
operations in SEZ and also DTA. Merely having an office in the DTA
for purpose of liaison/business promotion, does not restrict a SEZ
Unit from availing benefit extended to a standalone unit.
Approval by UAC is necessary, to claim benefit under the
Approval Committee (UAC) of the SEZ determines goods and services
required for the authorised operations of a Unit/Developer, under
the SEZ law. Hence approval of the UAC is necessary for availing the
notification benefit, on the taxable services.
condition (c) prescribed in paragraph 2 of the notification,
restrict the non-standalone Units/Developers, from availing upfront
exemption for wholly consumed services, which fall under category (i)
and (ii) of para 2(a) of the notification?
whom and for what purpose, Declaration in A-1 is required?
of category (i) and (ii) services listed in paragraph 2(a),
upfront exemption is made available to all SEZ Units/Developers, who
fulfill the conditions of notification; only in the case of category
(iii), difference is created between standalone and non-standalone
Declaration in Form A-1 is required to be produced, to a service
provider, to claim upfront exemption (after striking out the
inapplicable portion). This is a one-time Declaration. Original
Declaration can be retained with the SEZ Unit/Developer for business
record or for production to the jurisdictional Central
Excise/Service Tax authorities, if need be, for any verification; a
copy has to be retained by SEZ Specified Officer; self-attested
photocopies of the Declaration can be submitted to service provider
to avail upfront exemption, subject to fulfillment of other
conditions mentioned in the notification.
the expression “total turnover” found in paragraph 2(d) of the
notification is not clear: whether it refers to turnover of SEZ Unit
or the entity (including DTA and SEZ Unit). This may be clarified.
turnover includes turnover of DTA Unit and also export turnover of
SEZ Unit. This is the way to calculate proportionate refund. Table-C
in Form A-2, illustrates this aspect.
may not have export turnover; therefore, he cannot get refund of
service tax based on the formula provided for shared services in
paragraph 2(d) of the notification: therefore, it may be explained
how a Developer can claim exemption under the notification?
SEZ Developers will be using category (i) services listed in
paragraph 2(a), relating to immovable property located within SEZ;
upfront exemption is available for these services, and category (ii)
services, irrespective of whether the Developer is standalone or
not. As another option, refund route is also available. In the case
of category (iii) services if Developer is standalone, upfront
exemption is available. If Developer is not standalone, on service
tax paid on category (iii) services, which are exclusively used for
the authorised operations in SEZ, he can avail exemption through
refund route. ‘Exclusive use’ explained in clarification for
question No.2. may also be referred in this connection.
proportionate amount of service tax paid on shared services that
have not been refunded after applying the formula in paragraph 2(d),
shall be available to the DTA Units of the entity as cenvat credit?
consolidated refund claim under 17/2011-ST can be filed by an entity
having more than one SEZ unit and a centralized service tax
entity is having multiple SEZ Units with a centralized service tax
registration, consolidated refund claim can be filed, provided
separate accounts are maintained for receipt and use of services for
the authorised operations in SEZ Unit.
certified copies of invoices can be used for claiming refund, if
originals are needed for other statutory purpose; Whether on the
basis of single invoice, one can claim proportionate refund for SEZ
Unit and balance as cenvat credit
In terms of
the notification, original invoices are needed for claiming
refund; after receiving the refund, originals can be taken back on
submission of copies certified by Chartered Accountant. On a single
invoice, if proportionate refund (by SEZ Unit) and cenvat credit (by
DTA Unit) needs to be obtained, then also similar system shall be
F.No.254/30/2011-tru, Dated 18th May, 2011
Disclaimer : Though care has
been taken to reproduce the text in its original form, in case of any
inadvertent mistake, the above mentioned circular may be referred to.
(Anil Kumar Gupta)