Service Tax issues relating to units in SEZ- reg

the Appellate Tribunal was right in holding that the second reassessment proceedings were not validly initiated and thereby quashing the reassessment proceedings-the proceedings initiated by the AO for the second time under Section 147 is barred by limitation-even the proviso to Section 147 does not come into play on the facts of the case-AIT-2010-373-HC Even if the goods belong to same entry, manufacture does take place if new identifiable/marketable goods known in market emerge due to operation conducted-the process of ironing applied to the stiched brassieres prior to their packing was a process incidental to the completion of the brassieres as a manufactured product-process of purification and filtration being incidental or ancillary to the manufacture of a marketable product, the Respondent was entitled to Modvat credit on the inputs involved-AIT-2010-370-HC Larger Bench of CESTAT rules the Tribunal has ample power to condone the delay in filing the appeal including the one filed under section 35 E (4)-AIT-2010-372-CESTAT Corruption in IRS takes its toll-Deputy Commissioner of Income Tax Dhananjay Kumar arrested by CBI in Mumbai-Joint Commissioner of Customs & Excise Hemant Kothikar also arrested by CBI FM directs expediting of Cadre Restructuring in CBDT & CBEC Tariff Value for import of Brass Scrap is 3924-Customs Non-Tariff Notification No. 78 Chief Justice of Gauhati High Court Justice Ranjan Gogoi to be Chief Justice of Punjab & Haryana High Court Anti-dumping duty on imports of Acrylic Fibre originating in, or exported from Japan and Belarus-Customs Tariff Notification No.85 Prescribing SION for new product “Propylene” under Chemical & Allied Products Group-DGFT PN 7 Inclusion of Finished Leather in the Focus Product Scheme of FTP-DGFT PN 6 Exchange Rate for imported goods is Rs 47.25 per US Dollar and Rs 60.35 per EURO-Exchange Rate for export goods is Rs 46.30 per US Dollar and Rs 58.70 per EURO-Customs Non-Tariff Notification No. 77-Click on Exchange Rate for details Anti Dumping Duty under the Notification No.15/2007 is not applicable to Spandex Yarn (Elastomeric yarn)-Customs Circular No.30 Import of goods under Notification No.13/2010 for Commonwealth Games, 2010-Customs Circular No.31 Larger Bench of CESTAT rules charges towards pre-delivery inspection and after-sale-service by dealers from buyers of the cars to be included in the assessable value of cars for payment of excise duty-AIT-2010-366-CESTAT merely because there was non accounting of goods, penalty was technical and inference of clandestine removal was not called for-AIT-2010-365-HC ITAT rules provision for doubtful debts and provision for standard debts are to be taken into consideration for computation of book profit u/s. 115JB of the IT Act-AIT-2010-361-ITAT HC rules slitting of aluminum foils into customized width, mounting the same on the printing machine and thereafter printing the necessary text thereon is covered for 80IB benefit as it falls within the ambit of the term “produce”-AIT-2010-363-HC Definitive Anti-dumping duty imposed on imports of Coumarin, originating in, or exported from China-Customs Tariff Notification No. 82 Special Bench of ITAT Ruling-where a forward contract is entered into by the assessee to sell the foreign currency at an agreed price at a future date falling beyond the last date of accounting period, the loss is incurred to the assessee on account of evaluation of the contract on the last date of the accounting period i.e. before the date of maturity of the forward contract-AIT-2010-355-ITAT-SB

JUDGMENTS

CENTRAL EXCISE

CUSTOMS

exchange rate

SERVICE TAX

INCOME TAX

VAT

FINANCE ACTS

FINANCE BILLS

EOU STPI

SEZ

DGFT

RBI

NTT

RESOURCES

Email | Print

Circular No. 105/08/2008

F.No. 137/168/2008-CX.4

Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs

New Delhi, September 16th, 2008

Sub: Service Tax issues relating to units in SEZ- reg.

It has been observed that there has been lack of clarity in the field formations administering service tax as regards the applicability of service tax levy on units located in Special Economic Zones. This lack of clarity has resulted in certain problems especially with respect to service tax administration. The issues and the proposed actions are mentioned below, -

2. Non-payment of service tax by SEZ units providing taxable service outside SEZ

2.1 There is no exclusion to SEZs in the Chapter V of the Finance Act, 1994 (Service Tax law). Taxable services received by SEZ units and SEZ developers for consumption within the SEZ are exempt for service tax under notification No. 4/2004-ST, dated 31.3.2004 . However, service tax is applicable on taxable services provided by SEZ units, except such services which are exempt by notification No. 4/2004-ST. The C &AG, it in recent report has pointed out instances, where SEZ units in Chennai & Cochin were providing taxable services like manpower supply service, technical testing and analysis service etc., to units / persons outside SEZ, without payment of service tax. In this regard the Ministry of Commerce (MOC) has observed that monitoring and collection of service tax does not come under the jurisdiction of the Development Commissioner and that such responsibility rests with the jurisdictional service tax (or CX & ST) authorities under the Central Board of Excise and Customs. Therefore, field formations should ensure that SEZs units, providing taxable services to any person for consumption in DTA (or providing any taxable service which is otherwise not exempt), or is otherwise liable to pay service tax under the service tax law, take registration with the jurisdictional service tax authorities and discharge their service tax liability in terms of the Finance Act, 1994. In this regard a time bound survey may be undertaken by the jurisdictional Commissionerates to identify SEZ units which are providing any taxable service to a recipient for consumption outside SEZ, and if so whether or not, they are discharging ST liability correctly. This survey may be completed by 20. 10.2008, and a report in this regard may be sent to DGST by 31.10.2008, positively.

3. Refund of Service Tax on taxable services used for the purposes of exports of goods by SEZ units

3.1 Refund of service tax paid on certain taxable services used in export of goods is permitted under notification 41/2007-ST. This notification prescribes that the refund would be allowed by the jurisdictional Deputy Commissioner/Assistant Commissioner of Central Excise. Doubts have arisen as to the authority that would process these claims when made by SEZ, i.e., the SEZ authorities or jurisdictional service tax authorities. As stated above, the Ministry of Commerce has already opined that administering the service tax law is responsibility of CBEC. Refund of service tax is to be processed by the respective jurisdictional authority administering service tax law. Accordingly, it is clarified that the SEZ units, claiming refund of service tax, should take registration with the jurisdictional ST authorities (i.e. service tax commissionerates in Delhi, Mumbai, Bangalore, Ahmedabad, Kolkata and Chennai and the jurisdictional central excise commissionerates elsewhere) and file their claims there.

4. The information contained in this circular may be brought to the notice of SEZ Units and the Development Commissioners.

5. Receipt of the Circular may be acknowledged.

6. Hindi version will follow.

Yours faithfully,

(Gautam Bhattacharya)
Commissioner(ST)