SEZ
This query is : Resolved
06 March 2010
What is the meaning of "the exemption claimed by the developer or units of SEZ shall be provided by way of refund of service tax paid on the specified services used in realation to the authorised operation in the SEZ 'except for services consumed wholly within the SEZ" in relation to exemption to units located in SEZ.
thanks in adcvance.....
thanks in adcvance.....
08 March 2010
can anyone solve my this query..
thanks...
thanks...
11 March 2010
still....
it is open to resolve
it is open to resolve
25 July 2025
The sentence you're referring to relates to Service Tax exemptions for Special Economic Zones (SEZs) in India, as per the rules in effect around 2010. Here's a breakdown and explanation of the meaning:
Original Text:
"The exemption claimed by the developer or units of SEZ shall be provided by way of refund of service tax paid on the specified services used in relation to the authorised operation in the SEZ except for services consumed wholly within the SEZ."
Explanation:
SEZ Units & Developers:
These are businesses or entities that operate within an SEZ and are engaged in “authorized operations”, such as manufacturing, services, R&D, etc.
Service Tax Exemption:
Normally, businesses pay service tax on services they use. But SEZs get special exemptions as part of incentives.
Refund Route:
The rule says that if a developer or SEZ unit has paid service tax on specified services used for authorized operations, they can claim a refund of that tax. This means:
Pay the tax initially.
Apply for a refund from the government.
Exception — Services Consumed Wholly Within the SEZ:
If the service is entirely consumed within the SEZ, then no service tax should be charged at all—i.e., direct exemption at the point of supply, not via refund.
So, for these services, you don’t need to pay first and claim a refund later.
In Simple Terms:
If the service is used entirely within the SEZ (e.g., cleaning, security, canteen, etc. inside the SEZ premises):
No service tax should be charged by the provider — the exemption is outright.
If the service is not wholly consumed inside the SEZ (e.g., transport services, courier, consulting, or any part of the service outside the SEZ):
The service provider may charge service tax.
But the SEZ unit/developer can later claim a refund of the tax paid.
Why This Distinction?
It helps the government:
Prevent misuse of exemptions.
Maintain clarity over which services are consumed inside the SEZ vs. partly or fully outside.
If you want the exact reference, this rule is based on the Notification No. 9/2009-ST dated 3rd March 2009, read with Notification No. 17/2011-ST and others over the years that modified refund/exemption procedures for SEZs.
Original Text:
"The exemption claimed by the developer or units of SEZ shall be provided by way of refund of service tax paid on the specified services used in relation to the authorised operation in the SEZ except for services consumed wholly within the SEZ."
Explanation:
SEZ Units & Developers:
These are businesses or entities that operate within an SEZ and are engaged in “authorized operations”, such as manufacturing, services, R&D, etc.
Service Tax Exemption:
Normally, businesses pay service tax on services they use. But SEZs get special exemptions as part of incentives.
Refund Route:
The rule says that if a developer or SEZ unit has paid service tax on specified services used for authorized operations, they can claim a refund of that tax. This means:
Pay the tax initially.
Apply for a refund from the government.
Exception — Services Consumed Wholly Within the SEZ:
If the service is entirely consumed within the SEZ, then no service tax should be charged at all—i.e., direct exemption at the point of supply, not via refund.
So, for these services, you don’t need to pay first and claim a refund later.
In Simple Terms:
If the service is used entirely within the SEZ (e.g., cleaning, security, canteen, etc. inside the SEZ premises):
No service tax should be charged by the provider — the exemption is outright.
If the service is not wholly consumed inside the SEZ (e.g., transport services, courier, consulting, or any part of the service outside the SEZ):
The service provider may charge service tax.
But the SEZ unit/developer can later claim a refund of the tax paid.
Why This Distinction?
It helps the government:
Prevent misuse of exemptions.
Maintain clarity over which services are consumed inside the SEZ vs. partly or fully outside.
If you want the exact reference, this rule is based on the Notification No. 9/2009-ST dated 3rd March 2009, read with Notification No. 17/2011-ST and others over the years that modified refund/exemption procedures for SEZs.
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