Chargiability and liability of service tax, Service Tax

[SHANTI NARAIN]

Dear Sir, One of our client has entered into a contract for rendering architectural services with a company, which is going to build an IT Park in Chandigarh which is under SEZ. The company had applied to Commissioner of Special Economic Zone for the Certificate of Project under SEZ during F.Y 06-07 and given some advance to our client as architectural fee. Our Client had asked for service tax part but the Company's argument was that they have already applied for SEZ and waiting the certificate and SEZ is subject to service tax exemption (notification no 4/2004) and will not pay the same. The company got SEZ certificate from commissioner of special economic zone on 30th April,2007 for the above project. Now the query is:- Whether our client is liable to charge and pay service tax on fee received before getting certificate or not? Please advise. Thanks & Regards, Shanti Narain

Posts / Replies

[Surender Gupta]

At the time of providing services, the recipient was not registered as SEZ, you are not allowed to avail the benefit of exemption.

[Brijesh Verma]

Dear Sir, With all respect to my dear elder Brother Surendra Bhai, in my opinion you can avail the benefit of the notification. this is for the reason that NN. 4/2004 is an exemption notification which has to be construed in liberal sense in view of Supreme Court's decision in CIT Vs Vegetable Products Ltd. 88 ITR 192 = 1973 -TMI - 6382 - SUPREME Court. merely because the required certificate was issued afterwards would not take away the colour of the service being provided to a SEZ Developer. This is my personal opinion.