Services received by SEZ Units and developers : SBC also refundable along with service tax

Notification No. 02/2016-Service Tax, dated 3rd February, 2016

In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), read with sub-section (5) of section 119 of the Finance Act, 2015 (20 of 2015), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes following further amendments in the  notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2013 – Service Tax, dated the 1st July, 2013 , published in the Gazette of India, Extraordinary, vide number G.S.R. 448(E), dated the 1st July, 2013, namely:-

In the said notification, in paragraph 3, in sub-paragraph (III), after clause (b), the following clause shall be inserted, namely:-

““(ba) the SEZ Unit or the Developer shall be entitled to-

i.         refund of the Swachh Bharat Cess paid on the specified services on which ab-initio exemption is admissible but not claimed; and

ii.         the refund of amount as determined by multiplying total service tax distributed to it in terms of clause (a)  by effective rate of Swachh Bharat Cess and dividing the product by rate of service tax specified in section 66B of the Finance Act, 1994.””.

Editor’s Note : In short, if service tax is exempt, SBC is also exempt. If exemption is not claimed, then, SBC is refundable. In case of services commonly used for DTA and SEZ, refund of SBC = Service Tax refundable × 0.5% ÷ 14%.

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