Through Notification No. 9/2009 – ST dated March 3, 2009, the Central Government had provided for an exemption from service tax by way of refund in respect of taxable services in relation to authorized operations that are received by a developer of or a unit in a Special Economic Zone (SEZ). The same has now been amended by a Notification No. 15/2009-Service Tax  dated- 20/05/2009 to restore the exemption in respect of services consumed within the SEZ, without following the refund route.

The following are the salient features of the subject Notification:

  • An unconditional exemption has now been granted to taxable services provided in relation to authorized operations that are wholly consumed within the SEZ.
  • In cases where the services are wholly consumed within the SEZ, the requirement of first paying the service tax by the service provider and then claiming the refund thereof by developer/unit has now been dispensed with.
  • The exemption by way of refund would now be limited to situations where taxable services provided to developer of an SEZ or units in an SEZ in relation to the authorized operations are consumed partially or wholly outside SEZ.

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