1. A PRESENTATION

2.  CHAPTER VI of SEZ Act  Special Fiscal Provisions for Special Economic Zones  26. (1) Subject to the provisions of sub-section (2), every Developer and the entrepreneur shall be entitled to the following exemptions, drawbacks and concessions, namely … (e) exemption from service tax under Chapter-V of the Finance Act, 1994 on taxable services provided to a Developer or Unit to carry on the authorised operations in a Special Economic Zone;

3.  (2) The Central Government may prescribe the manner in which, and the terms and conditions subject to which, the exemptions, concessions, drawback or other benefits shall be granted to the Developer or entrepreneur under sub-section (1).

4.  exempts SERVICE TAX  on services received by an SEZ Unit or Developer of SEZ and  used for the authorised operation

5.  Exemption by way of refund of service tax paid on the specified services received and used for the authorised operations:  Provided that where the specified services are used exclusively for authorised operations, the person liable to pay service tax has the option not to pay the service tax ab initio  subject to the conditions and procedure as prescribed.  In practice, ab initio route is the rule & refund is the exception.

6.  The SEZ Unit or the Developer shall get approval by the Approval Committee of the list of the services as are required for the authorised operations;

7.  SEZ Unit or Developer shall furnish declaration in Form A- 1, verified by Specified Officer of the SEZ;  on the basis of A-1, the jurisdictional Deputy Commissioner of Central Excise/Service Tax issues A-2;

8.  Only on the basis of an A- 2, the service provider shall provide the specified services to the SEZ Unit or Developer without payment of service tax;

9.  SEZ Unit or the Developer shall furnish to the jurisdictional Superintendent of Central Excise a quarterly statement, in Form A-3, furnishing the details of specified services received by it without payment of service tax;  One of the essential pre-conditions to avail ab initio exemption;

10.  (i) the specified services that are not exclusively used for authorised operations or  (ii) the specified services on which ab-initio exemption is admissible but not claimed

11.  the SEZ Unit or the Developer should obtain registration under rule 4 of the Service Tax Rules, 1994.  shall file the claim for refund to the jurisdictional Deputy Commissioner of Central Excise in Form A-4;  the amount indicated in the invoice, bill including the service shall have been paid to the person liable to pay the service tax thereon, or the amount of service tax payable under reverse charge shall have been paid by the SEZ unit;

12.  the claim for refund shall be filed within one year from the end of the month in which actual payment of service tax was made or such extended period as may be allowed by AC/DC;  only one claim for every quarter;  more than one SEZ Unit under a common service tax registration - a common refund claim may be filed

13.  the service tax paid on the specified services that are common to the authorised operation in an SEZ and the operation in DTA units shall be distributed among them as per rule 7 of the Cenvat Credit Rules.  For the purpose of distribution, the turnover of the SEZ Unit/Developer shall be taken as the turnover of authorised operations during the relevant period.

14.  The SEZ Unit/Developer, who intends to avail exemption or refund under this notification, shall maintain proper account of receipt and use of the specified services.

15.  SEZ Unit or the Developer have the option not to avail of this exemption and instead take CENVAT credit on the specified services in accordance with the CENVAT Credit Rules, 2004.

16.  Issue of A-2 within fifteen working days from the date of submission of Form A-1  A-2 is valid from the date of verification of Form A-1 by the Specified Officer of the SEZ;  if the Form A-1 is not submitted to AC/DC within fifteen days of its verification by the Specified Officer, the authorisation shall be valid from the date on which it is submitted;

17.  Normally, the Provider of specified services won’t be charging service tax from SEZ Unit on the strength of A-2.  But, pending issuance of A-2, the provider of specified services may, on the basis of A-1, provide such specified services, without payment of service tax, and the SEZ Unit or the Developer shall provide a copy of authorisation to the service provider immediately on receipt of such authorisation:

18.  If the SEZ Unit/Developer does not provide a copy of A-2 to the provider of specified services within a period of three months from the date of provision of service, the service provider shall pay service tax on specified services so provided in terms of the first proviso.

19.  A service shall be treated as used exclusively for the authorised operations if the service is received by the SEZ Unit or the Developer under an invoice in the name of such Unit or the Developer and the service is used only for furtherance of authorised operations in the SEZ.

20.  list of 58+2 services which may be permitted by all UACs as default authorised services;  A-1’s can be routed through specified officers to AC/DC

21.  Whether for refund or ab initio, approval by UAC for a particular service is a MUST.  Blurring of ‘specific service’ definitions in negative list scenario;  Need for specified services not properly elaborated while submitting to UAC – difficulty at the time of refund;  Along with refund claim, add the copy of letter submitted to UAC at the time of approval

22.  A-2’s being issued within 5-7 days – only through speedpost  All claims being sanctioned within 3 months of filing  If issue of A-2 is delayed, ask the service provider to provide services on the strength of A-1 (Do give A-2 later).

23.  Definition of ‘authorised operations’ – non-DTA  Rent-a-cab service – can claim ab initio  Non-submission of A-3’s to RO is a serious lapse which may result in denial of notification benefit;

24.  Educating your service providers so that they avail exemption only on the strength of A-2;  Request for waiver of PH if there are no additional submissions apart from those in written submissions;  Refund disbursal by NEFT  Quick withdrawal of ineligible portions of claims

25.  Update your mobile number and e-mail in your ACES Profile;  Give full documentation  Contact directory of all officers in Kakinada Commissionerate is posted on website: www.cenexcisevizag2.gov.in > Contact Us www.cenexcisevizag2.gov.in  Please suggest what more useful information can be posted on www.cenexcisevizag2.gov.inwww.cenexcisevizag2.gov.in

26.  THANK YOU