Nath hardsells relief for suppliers to SEZ

G GANAPATHY SUBRAMANIAM & DEEPSHIKHA SIKARWAR

TIMES NEWS NETWORK[ THURSDAY, APRIL 05, 2007 02:49:16 AM]

NEW DELHI: Services supplied to special economic zones outside the zone
may be exempted from service tax. Making a strong pitch for the move,
the commerce ministry has asked the revenue department to provide the
exemption. A decision on the proposal is expected at a meeting on April 16.

The commerce ministry feels services supplied to a SEZ developer or unit
to carry out authorised operations in a special economic zone were
tax-exempt and the provision does not state that the operations had to
be carried out within the SEZ.

It has now taken up the issue with the revenue department as its service
tax wing was limiting the exemption. Service tax officials were limiting
the waiver as an earlier circular had provided service tax exemption for
consumption of a service within the zone.

Since the provisions of the SEZ Act do not specify if the service has to
be consumed within a SEZ, the revenue department cannot impose tax on
services consumed outside the zone for carrying out the business of the
zone, a commerce ministry official told ET.
Ministry officials will now hold a meeting with their counterparts in
the revenue department to resolve the issue.

The SEZ Act became operational from February 10, 2006. Section 26 of the
Act gives details of the exemptions and concessions available to SEZ
developers and entrepreneurs.

SEZ developers & units and the export promotion council for
export-oriented units and SEZs has taken up the matter on many occasions
with officials from both the departments. But with tax officials raising
demands on them, it had created an air of uncertainty.

http://economictimes.indiatimes.com/News/Economy/Infrastructure/Nath_hardsells_relief_for_suppliers_to_SEZ/articleshow/1858824.cms