1. Our client had begin to provide service to a Developer of SEZ before getting the approval of Board of Approval. During our service providng period the developer got the approval.
2. Department disallowed the claim of exemption under notification No.4/2004 on the ground that the developer has no approval at the time of rendering the service.
Pls clarify the issue. Is the department view is true?
13 February 2008
THE DEPT. CONTENTION IS WRONG SINCE EVEN UNITS UNDER CONSTRUCTION ARE ENTITLED TO THE EXEMPTION, AS MAY BE SEEN CLEARLY FROM THE BELOW NOTIF. NO 4/2004 DT 31-03-04
GOVERNMENT OF INDIA
MINISTRTY OF FINANCE
DEPARTMENT OF REVENUE
NOTIFICATION
No. 4 /2004-Service Tax
New Delhi, the 31st March,2004.
11Chaitra,1926 (SAKA)
G.S.R248. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 ( 32 of 1994) and in supersession of the notification of the Government of India in the erstwhile Ministry of Finance and Company Affairs ( Department of Revenue), No. 17/2002-ServiceTax, dated the 21st November, 2002, published in the Gazette of
India, Extraordinary, Part II, Section 3, Sub-section (i) dated the 21st November, 2002, vide, G.S.R.777(E), dated the 21st November 2002, except as respects things done or omitted to be done before such supersession, the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts taxable service of any description as defined in clause (90) of sub-section (1) of section 65 of the said Act provided to a developer of Special Economic Zone or a unit (including a unit under construction) of Special Economic Zone by any service provider for consumption of the services within such Special Economic Zone, from the whole of service tax leviable thereon under section 66 of the said Act, subject to the following conditions, namely:-
(i) the developer has been approved by the Board of Approvals to develop, operate and maintain the Special Economic Zone;
(ii) the unit of the Special Economic Zone has been approved by the Development Commissioner or Board of Approvals, as the case may be, to establish the unit in the Special Economic Zone;
(iii) the developer or unit of a Special Economic Zone shall maintain proper account of receipt and utilisation of the said taxable services.
Explanation .- For the purposes of this notification,-
(1) “ Board of Approvals ” means the combined Board of Approvals for export oriented unit and Special Economic Zone units, as notified in the Official Gazette, from time to time by the Government of India in the Ministry of Commerce and Industry;
(2) “developer” means a person engaged in development or operation or maintenance of Special Economic Zone, and also includes any person authorised for such purpose by any such developer;
(3) “ Special Economic Zone” means a zone specified as Special Economic Zone by the Central Government in the notification issued under clause (iii) of Explanation 2 to the proviso to sub-section (1) of section 3 of the Central Excise Act, 1944 (1 of 1944). [F. No. 305/55/2003-FTT] ( V.Kezo ) Under Secretary to the Government of India.
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