Service tax applicability in sez area

This query is : Resolved

rkg (Querist)
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27 April 2012 sir,
we are main contractors awarded contract in SEZ area, for which i assume service tax is not payable. we gave sub contract of water treatment plant to mr. B who says, even if service tax is not payable on us due to SEZ, he is liable to service tax and he will charge service tax to us. if he is correct. pl guide.

thanks in advance.

Vivek Mehta (CA, DISA,CS, MBA)

Vivek Mehta (CA, DISA,CS, MBA) (Expert)
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27 April 2012 Service tax is applicable on the basis of territorial nexus. hence it is irrelevant tht the services are provided by miain or sub contractor thy shall be out of the perview of service tax

Swanand

Swanand (Expert)
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02 May 2012 Mr. B is right, It is SEZ unit which is allowed to procure services without service tax ( not contractors ). So SEZ unit will procure tax free services from main contractors only as service bill is raised by main contractor on SEZ unit. As Mr. B is not billing to SEZ unit directly Service Tax become payable . ( The reason is this transaction is between Mr. A & Mr. B , Service Tax Exemption Facility is in hand of SEZ unit who is not a party to contract between A & B )

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