SERVICE TAX EXEMPTION TO SEZ UNITS – ISSUES

Commerce Ministry feels the Special Economic Zone (SEZ) Act already provided for tax exemption for services consumed either inside or outside an SEZ so long it was for an authorized operation within a zone.They said fi eld formations were only interpreting the Act wrongly, but the view has been refuted by the revenue department. The SEZ Act states that exemption from service tax would be provided on taxable services provided to a developer or unit to carry on the authorized operations in an SEZ. A fi nal resolution on the issue may take some time as both the ministries continue to slug it out on the interpretation of a provision in the law.