CBEC wants SEZ units to be surveyed for service tax compliance

New Delhi, Sept. 19 SEZ units providing taxable services to recipients outside the special economic zones (SEZ) are under Government scanner, with revenue department officials being directed to submit by October 31 a report on whether such units were discharging their service tax obligations or not. The report is to be submitted to the Director-General of Service Tax.

The Central Board of Excise & Customs (CBEC) directive to survey the SEZ units follows a recent report of the Comptroller and Auditor General (CAG) which highlighted that certain SEZ units in Chennai and Kochi were providing taxable services such as manpower supply services, technical testing and analysis service to units / persons outside the zone without payment of service tax.

Taxable services received by SEZ units and SEZ developers for consumption within the SEZ are exempt from service tax. However, service tax is applicable on taxable services provided by SEZ units, except in situations where specifically exempted.

In a communiqué to its field formations, the CBEC has said they should ensure that SEZ units, providing taxable services to any person for consumption in domestic tariff area (or providing any taxable service which is otherwise not exempt), should register with the jurisdictional service tax authorities and discharge their service tax liability.

Meanwhile, CBEC has also clarified that SEZ units claiming refund of service tax should register with the jurisdictional service tax authorities (i e. service tax commissionerates in Delhi, Mumbai, Bangalore, Ahmedabad, Kolkata and Chennai and the jurisdictional central excise commissioners elsewhere).