BLANKET EXEMPTION TO SERVICES CONSUMED WITHIN SEZ

Special Economic Zone has always been in news since its inception, more often due to the ambiguities it has created rather than the opportunities it should have created. With the series of blanket exemption and incentives, the Special Economic Zones have maintained its importance when it comes to exporters and its priority increases in light of the sunset clause in case of 100% Export Oriented Unit – EOU. However, the inconsistency between the Ministry of Finance and the Ministry of Commerce as well as the bureaucratic approach has dampened the attraction, excitement and interest shown by the exporters in the initial phase. In 2004, the Ministry of Finance issued Notification exempting Taxable Services of any description provided to a developer of Special Economic Zone or a unit of Special Economic Zone by any service provider for consumption of services “within” such Special Economic Zone. Later ambiguities with respect to meaning and scope of “within such SEZ” who was highlighted by the Ministry of Finance denying benefit of such exemptions to the service provided to SEZ.

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