CBDT Circular On Set-Off Of Eligible Unit Profits Against Ineligible Unit Loss - 10A/10B

The CBDT has issued a Circular dated 16th July 2013 giving its view on the controversial issue as to whether the profit of a unit eligible for deduction u/s 10A/ 10B has to be first set-off against the loss suffered by an ineligible unit before computing the available deduction u/s 10A/10B. The CBDT has expressed the view that as s. 10A/10B is now a "deduction" provision, first, the income/loss from various sources i.e. eligible and ineligible units, under the same head have to be aggregated in accordance with s. 70 of the Act and thereafter, the income from one ahead has to be aggregated with the income or loss of the other head in accordance with section 71 of the Act. If after giving effect to the provisions of sections 70 and 71 there is any income (where there is no brought forward loss to be set off in accordance with the provisions of section 72 of the Act) and the same is eligible for deduction in accordance with the provisions of Chapter VI-A or sections 10A, 10B etc, the same shall be allowed in computing the total income of the assessee.

Contrast with the view taken in Scientific Atlanta vs. ACIT 129 TTJ 273 (Che)(SB), CIT vs. Yokogawa India Ltd 341 ITR 385 (Kar), CIT vs. Black & Veatch Consulting 348 ITR 72 (Bom), CIT vs. TEI Technologies 78 DTR 225 (Del) and other judgements

(Departmental View)

File No: 279/Misc./M-116/2012-ITJ

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, the 16th July' 2013

Sub: Circular on Sections 10A, 10AA, 10B and 10BA.

It has been brought to the notice of the Board that the provisions of 10A/10AA/10B/10BA of the Income-tax Act, with regard to applicability of Chapter TV of the Act and set off and carry forward of losses, are being interpreted differently by the Officers of the Department as well as by different High Courts.

2. The two sections 10A and 10B of the Act were initially placed on statute in 1981 and 1988 respectively, and continued with some modifications and amendments till 31.03.2001. Section 10A as inserted by Finance Act, 1981 read as under:

"Section 10A. Special provision in respect of newly established industrial undertakings in the free trade zones.- (1) Subject to the provisions of this section, any profits and gains derived by an assessee from an industrial undertaking to which this section applies shall not be included in the total income of the assessee."

2.1. Similarly section 10B as inserted by Finance Act, 1988 read as under:

"10B: Special provision in respect of newly established hundred percent export oriented undertakings.- Subject to the provisions of this section, any profits and gains derived by an assessee from a hundred per cent export oriented undertaking (hereafter in this section referred to as the undertaking) to which this section applies shall not be included in the total income of the assessee."

3. Vide Finance Act, 2000 section 10A and 10B of the Act were substituted. Section 10A as substituted by Finance Act, 2000 reads as under:-

"Section 10A.(1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee...:

3.1 Similarly, section 10B as substituted by Finance Act, 2000 reads as under:-

"10B. (1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by a hundred per cent export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee...."

3.2 The effect of the substitution of section 10A and 10B of the Act has been elaborated in Circular No. 794 dated 9.8.2000 which clearly provides that the new provisions provide for deduction in respect of profits and gains derived by an undertaking from export of articles or things or computer software.

4. Sub-sections (6) of sections 10A and 10B were amended by Finance Act, 2003 with retrospective effect from 1. 4. 2001. Circular no.7/2003 dated 5.9.2003 explains the amendments brought by Finance Act, 2003. The relevant paragraph is reproduced below:

"20. Providing for carry forward of business losses and unabsorbed depreciation to units in Special Economic Zones and 100% Export Oriented Units

20.1 Under the existing provisions of sections 10A and 10B, the undertakings operating in a Special Economic Zone (under section 10A) and 200% Export Oriented Units (EOU's) (under section 10B) are not permitted to carry forward their business losses and unabsorbed depreciation.

20.2 With a view to rationalize the existing tax incentives in respect of such units, sub-section (6) in sections 10A and 10B has been amended to do away with the restrictions on the carry forward of business losses and unabsorbed depreciation.

20.3 The amendments have been brought into effect retrospectively from 1-4-2001 and have been made applicable to business losses or unabsorbed depreciation arising in the assessment year 2001-02 and subsequent years."

5. From the above it is evident that irrespective of their continued placement in Chapter III, section 10A and 10B as substituted by Finance Act, 2000 provide for deduction of the profits and gains derived from the export of articles or things or computer software for a period of 10 consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such article or thing or computer software. The deduction is to be allowed from the total income of the assessee. The term 'total income' has been defined in section 2 (45) of the IT Act and it means the total amount of income referred to in section 5, computed in the manner laid down in the Income-tax Act.

5.1 All income for the purposes of computation of total income is to be classified

under the following heads of income and computed in accordance with the provisions of Chapter IV of the Act-

• Salaries

• Income from house property

• Profits and gains of business and profession

• Capital gains

• Income from other sources

5.2 The income computed under various heads of income in accordance with the provisions of Chapter IV of the IT Act shall be aggregated in accordance with the provisions of Chapter VI of the IT Act, 1961. This means that first the income/loss from various sources i.e. eligible and ineligible units, under the same head are aggregated in accordance with the provisions of section 70 of the Act. Thereafter, the income from one ahead is aggregated with the income or loss of the other head in accordance with the provisions of section 71 of the Act. If after giving effect to the provisions of section 70 and 71 of the Act there is any income (where there is no brought forward loss to be set off in accordance with the provisions of section 72 of the Act) and the same is eligible for deduction in accordance with the provisions of Chapter VI-A or section 10A, 10B etc. of the Act, the same shall be allowed in computing the total income of the assessee.

5.3 If after aggregation of income in accordance with the provisions of section 70 and 71 of the Act, the resultant amount is a loss (pertaining to AY 2001-02 and any subsequent year) from eligible unit it shall be eligible for carry forward and set off in accordance with the provisions of section 72 of the Act. Similarly, if there is a loss from an ineligible unit, it shall be carried forward and may be set off against the profits of eligible unit or ineligible unit as the case may be, in accordance with the provisions of section 72 of the Act.

6. The provisions of Chapter IV and Chapter VI shall also apply in computing the income for the purpose of deduction under section 10AA and 10BA of the Act subject to the conditions specified in the said sections.

S/d

(Hemant Gupta)

Under Secretary to the Govt. of India

 

Discount on shares issued under ESOP/ESPP held as ‘expenditure’ and part of employees’ cost - ITAT

ESOP discount (difference between market price and issue price) is a deductible expenditure at the time of vesting of the option. An adjustment has to be made if the market price is different at the time of exercise of the option

The assessee framed an Employee Stock Option Plan (ESOP) pursuant to which it granted options to its employees to subscribe for shares at the face value of Rs. 10. As the market price of each share was Rs. 919, the assessee claimed that it had given a discount of Rs. 909 which was allowable as a deduction as 'employee compensation. Though the options vested equally over four years, the assessee claimed a larger amount in the first year than was available under the SEBI guidelines. The AO & CIT(A) rejected the claim on the ground that there was no "expenditure". On appeal to the Tribunal, the issue was referred to the Special Bench. HELD by the Special Bench:

(i) The difference (discount) between the market price of the shares and their issue price is "expenditure" in the hands of the assessee because it is a substitute to giving direct incentive in cash for availing the services of the employees. There is no difference between a case where the company issues shares to the public at market price and pays a part of the premium to the employees for their services and another where the shares are directly issued to employees at a reduced rate. In both situations, the employees stand compensated for their effort. By undertaking to issue shares at a discount, the company does not pay anything to its employees but incurs the obligation of issuing shares at a discounted price at a future date. This is nothing but "expenditure" u/s 37(1);

(ii) The liability cannot be regarded as being "contingent" in nature because the rendering of service for one year is sine qua non for becoming eligible to avail the benefit under the scheme. Once the service is rendered for one year, it becomes obligatory on the part of the company to honor its commitment of allowing the vesting of 25% of the option. The liability is incurred at the end of the first year though it is discharged at the end of the fourth year when the options are exercised by the employees. The fact that some options may lapse due to non-exercise/ resignation etc does not make the entire liability contingent;

(iii) However, the obligation to issue shares at a discounted premium does not arise at the stage the options are granted. It arises at the stage that the options are vested in the employees. The amount deductible has to be determined based on the period and percentage of vesting under the ESOP scheme;

(iv) There is likely to be a difference in the quantum of discount at the stage of vesting of the stock options (when the deduction is allowable) and at the stage of exercise of the options. The difference has to be adjusted by making suitable northwards or southwards adjustment at the time of exercise of the option depending on the market price of the shares then prevailing. The fact that the SEBI Guidelines do not provide for the adjustment of discount at the time of exercise of options is irrelevant because accounting principles cannot affect the position under the Income-tax Act.

(v) On facts, the assessee's method of claiming a larger deduction in the first year defies logic. As the options vest equally over a period of four years, the deduction ought to be claimed in four equal installments on a straight line basis (Ranbaxy Laboratories 124 TTJ 771 (Delhi) reversed, S.S.I. Ltd. v. DCIT 85 TTJ 1049 (Chennai) approved, PVP Ventures 211 Taxman 554 referred. See also Spray Engineering Devices Ltd 53 SOT 70 (Chd)

Facts

• Assessee-company formulated ESOPs and set up Employees Welfare Trust for that purpose.

• During the assessment year 2003-2004, the assessee-company floated ESOP 2000 under which it granted option of shares with face value of Rs.10 at the same rate by claiming that the market price of such shares was Rs.919, thereby claiming the total discount per option at Rs. 909.

• During the previous year relevant to the assessment year 2003- 04, the appellant company granted 71,510 options to its employees.

• The difference between the alleged market price and the exercise price, at Rs.909 per option totaling Rs.6.52 crore was claimed as compensation to the employees to be spread over the vesting period of four years.

• A deduction of Rs3.38 crore was claimed for the assessment year 2003-2004 on the strength of the SEBI Guidelines.

• Assessee claimed discount under ESOP as employee compensation cost under section 37(1) of the Act.

• AO disallowed deduction of the same on the grounds that there was no specific provision in the Act entitling assessee to deduction under section 37(1).

• CIT(A) upheld AO's orders.

• Aggrieved by denial of deduction for discount under ESOP, instant appeal is filed by assessee.

Issues before ITAT

• The moot question: Whether the Employee stock option compensation expense is an allowable deduction in the computation of income under the head "Profits and gains of business or profession"? This larger question can be answered in the following three steps, viz.,

I.		Whether any deduction of such discount is allowable?
II.		If yes, then when and how much?
III.		Subsequent adjustment to discount.

Rival contentions

Revenue

• Discount on ESOPs is short receipt of share premium which is capital receipt. Since, capital receipt is not taxable, its short receipt is not deductible.

• Discount on ESOPs is contingent liability as it crystallizes only when employee fulfils service for 4 years.

• Discount on ESOPs is not an expenditure as nothing is paid out or away.

Assessee

• Discount is nothing but employees' compensation cost.

Held

(A) Nature of ESOPs

• Section 2(15A) of the Indian Companies Act, 1956 defines "employee stock option" to mean 'the option given to the whole-time Directors, Officers or employees of a company, which gives such Directors, Officers or employees, the benefit or right to purchase or subscribe at a future date, the securities offered by the company at a predetermined price".

• In an ESOP, the company undertakes to issue shares to its employees at a future date at a price lower than the current market price. This is achieved by granting stock options to its employees at discount.

• The amount of discount represents the difference between market price of the shares at the time of the grant of option and the offer price.

• In order to be eligible for acquiring the shares under the ESOP, the concerned employees are obliged to render services to the company during the vesting period as given in the scheme.

• On the completion of the vesting period in the service of the company, such options vest with the employees.

• The options are then exercised by the employees by making application to the employer for the issue of shares against the options vested in them.

• The gap between the completion of vesting period and the time for exercising the options is usually negligible.

• The company, on the exercise of option by the employees, allots shares to them who can then freely sell such shares in the open market subject to the terms of the ESOP.

• Thus it can be seen that it is during the vesting period that the options granted to the employees vest with them.

• This period commences with the grant of option and terminates when the options so granted vest in the employees after serving the company for the agreed period.

• By granting the options, the company gets a sort of assurance from its employee for rendering uninterrupted services during the vesting period and as a quid pro quo it undertakes to compensate the employees with a certain amount given in the shape of discounted premium on the issue of shares.

(B) Whether discount on ESOPs is short capital receipt?

• If a company issues shares to the public or the existing shareholders at less than the otherwise prevailing premium due to market sentiment or otherwise, such short receipt of premium would be a case of a receipt of a lower amount on capital account.

• It is so because the object of issuing such shares at a lower price is nowhere directly connected with the earning of income. It is in such like situation that the contention of the learned Departmental Representative would properly fit in, thereby debarring the company from claiming any deduction towards discounted premium.

• It is quite basic that the object of issuing shares can never be lost sight of.

• When a company undertakes to issue shares to its employees at a discounted premium on a future date, the primary object of this exercise is not to raise share capital but to earn profit by securing the consistent and concentrated efforts of its dedicated employees during the vesting period.

• Such discount is construed, both by the employees and company, as nothing but a part of package of remuneration.

• In other words, such discounted premium on shares is a substitute to giving direct incentive in cash for availing the services of the employees.

• There is no difference in two situations viz., one, when the company issues shares to public at market price and a part of the premium is given to the employees in lieu of their services and two, when the shares are directly issued to employees at a reduced rate. In both the situations, the employees stand compensated for their effort.

• If under the first situation, the company, say, on receipt of premium amounting to Rs. 100 from issue of shares to public, gives Rs. 60 as incentive to its employees, such incentive of Rs. 60 would be remuneration to employees and hence deductible.

• In the same way, if the company, instead, issues shares to its employees at a premium of Rs.40, the discounted premium of Rs.60, being the difference between Rs.100 and Rs.40, is again nothing but a different mode of awarding remuneration to employees for their continued services.

• In both the cases, the object is to compensate employees to the tune of Rs.60.

• It follows that the discount on premium under ESOP is simply one of the modes of compensating the employees for their services and is a part of their remuneration.

• Thus, the contention of the ld. DR that by issuing shares to employees at a discounted premium, the company got a lower capital receipt, is bereft of an force.

• The sole object of issuing shares to employees at a discounted premium is to compensate them for the continuity of their services to the company.

• By no stretch of imagination, we can describe such discount as either a short capital receipt or a capital expenditure. It is nothing but the employees cost incurred by the company.

• The substance of this transaction is disbursing compensation to the employees for their services, for which the form of issuing shares at a discounted premium is adopted.

(C) Whether discount on ESOPs is an expenditure

• Section 43 contains the definition of certain terms relevant to income from profits of business or profession covering sections 28 to 41.

• Section 37 obviously falls under Chapter IV-D. Sub-section (2) of section 43 defines "paid" to mean: "actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under the head 'profits and gains of business or profession'."

• When we read the definition of the word "paid" under section 43(2) in juxtaposition to section 37(1), the position which emerges is that it is not only paying of expenditure but also incurring of the expenditure which entails deduction under section 37(1) subject to the fulfillment of other conditions.

• The word 'expenditure' has not been defined in the Act.

• However, sec. 2(h) of the Expenditure Act, 1957 defines 'expenditure' as : 'Any sum of money or money's worth spent or disbursed or for the spending or disbursing of which a liability has been incurred by an assessee……'.

• When section 43(2) of the Act is read in conjunction with section 37(1), the meaning of the term 'expenditure' turns out to be the same as is there in the aforequoted part of the definition under section 2(h) of the Expenditure Act, 1957, viz., not only 'paying out' but also 'incurring'.

• By undertaking to issue shares at discounted premium, the company does not pay anything to its employees but incurs obligation of issuing shares at a discounted price on a future date in lieu of their services, which is nothing but an expenditure under section 37(1) of the Act.

(D) Whether discount of ESOPs is contingent liability

• A liability definitely incurred by an assessee is deductible notwithstanding the fact that its quantification may take place in a later year.

• The mere fact that the quantification is not precisely possible at the time of incurring the liability would not make an ascertained liability a contingent.

• If we consider it at micro level qua each individual employee, it may sound contingent, but if view it at macro level qua the group of employees as a whole, it loses the tag of 'contingent' because such lapsing options are up for grabs to the other eligible employees.

• In any case, if some of the options remain unvested or are not exercised, the discount hitherto claimed as deduction is required to be reversed and offered for taxation in such later year.

• The discount in relation to options vesting during the year cannot be held as a contingent liability.

(E) ESOP is fringe benefit and consideration for employment

• Section 115WB(1)(d) defines discounted premium to employees on ESOP as consideration for employment and fringe benefit.

• Natural corollary is that discount on ESOP is (i) an expenditure (ii) an ascertained and not contingent liability (iii)not a short capital receipt.

(F) When and how much-quantum of deduction in respect of discount on ESOPs.

• Liability to pay the discounted premium is incurred during the vesting period and the amount of such deduction is to be found out as per the terms of the ESOP scheme by considering the period and percentage of vesting during such period.

• Deduction of the discounted premium to be allowed during the years of vesting on a straight line basis.

• This view accords with ITAT's ruling in SSI Ltd and accounting treatment as per SEBI's Guidelines on ESOPs.

(G) Subsequent adjustment to cost

• The amount of discount claimed as deduction during the vesting period is required to be reversed in relation to the unvesting/lapsing options at the appropriate time.

• However, an adjustment to the income is called for at the time of exercise of option by the amount of difference in the amount of discount calculated with reference the market price at the time of grant of option and the market price at the time of exercise of option.

 

Source: ITAT Online & Taxmann

 

SEZ - Service Tax New Refund Procedure _ 2013

NOTIFICATION NO

12/2013-ST., Dated: July 1, 2013

In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act) read with sub-section 3 of section 95 of Finance (No.2), Act, 2004 (23 of 2004) and sub-section 3 of section 140 of the Finance Act, 2007 (22 of 2007) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 40/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 482 (E), dated the 20th June, 2012, except as respects things done or omitted to be done before such supersession, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the services on which service tax is leviable under section 66B of the said Act, received by a unit located in a Special Economic Zone (hereinafter referred to as SEZ Unit) or Developer of SEZ ( hereinafter referred to as the Developer) and used for the authorised operation from the whole of the service tax, education cess, and secondary and higher education cess leviable thereon.

2. The exemption shall be provided by way of refund of service tax paid on the specified services received by the SEZ Unit or the Developer and used for the authorised operations:

Provided that where the specified services received by the SEZ Unit or the Developer are used exclusively for the authorised operations, the person liable to pay service tax has the option not to pay the service tax ab initio, subject to the conditions and procedure as stated below .

3. This exemption shall be given effect to in the following manner:

(I) The SEZ Unit or the Developer shall get an approval by the Approval Committee of the list of the services as are required for the authorised operations (referred to as the ‘specified services' elsewhere in the notification) on which the SEZ Unit or Developer wish to claim exemption from service tax.

(II) The ab-initio exemption on the specified services received by the SEZ Unit or the Developer and used exclusively for the authorised operation shall be allowed subject to the following procedure and conditions, namely:-

(a) the SEZ Unit or the Developer shall furnish a declaration in Form A-1, verified by the Specified Officer of the SEZ, along with the list of specified services in terms of condition (I);

(b) on the basis of declaration made in Form A-1, an authorisation shall be issued by the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be to the SEZ Unit or the Developer, in Form A-2;

(c) the SEZ Unit or the Developer shall provide a copy of said authorisation to the provider of specified services. On the basis of the said authorisation, the service provider shall provide the specified services to the SEZ Unit or the Developer without payment of service tax;

(d) the SEZ Unit or the Developer shall furnish to the jurisdictional Superintendent of Central Excise a quarterly statement, in Form A-3, furnishing the details of specified services received by it without payment of service tax;

(e) the SEZ Unit or the Developer shall furnish an undertaking, in Form A-1, that in case the specified services on which exemption has been claimed are not exclusively used for authorised operation or were found not to have been used exclusively for authorised operation, it shall pay to the government an amount that is claimed by way of exemption from service tax and cesses along with interest as applicable on delayed payment of service tax under the provisions of the said Act read with the rules made thereunder.

(III) The refund of service tax on (i) the specified services that are not exclusively used for authorised operation, or (ii) the specified services on which ab-initio exemption is admissible but not claimed, shall be allowed subject to the following procedure and conditions, namely:-

(a) the service tax paid on the specified services that are common to the authorised operation in an SEZ and the operation in domestic tariff area [DTA unit(s)] shall be distributed amongst the SEZ Unit or the Developer and the DTA unit (s) in the manner as prescribed in rule 7 of the Cenvat Credit Rules. For the purpose of distribution, the turnover of the SEZ Unit or the Developer shall be taken as the turnover of authorised operation during the relevant period.

(b) the SEZ Unit or the Developer shall be entitled to refund of the service tax paid on (i) the specified services on which ab-initio exemption is admissible but not claimed, and (ii) the amount distributed to it in terms of clause (a).

(c) the SEZ Unit or Developer who is registered as an assessee under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder, or the said Act or the rules made thereunder, shall file the claim for refund to the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, the as the case may be, in Form A-4;

(d) the amount indicated in the invoice, bill or, as the case may be, challan, on the basis of which this refund is being claimed, including the service tax payable thereon shall have been paid to the person liable to pay the service tax thereon, or as the case may be, the amount of service tax payable under reverse charge shall have been paid under the provisions of the said Act;

(e) the claim for refund shall be filed within one year from the end of the month in which actual payment of service tax was made by such Developer or SEZ Unit to the registered service provider or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit;

(f) the SEZ Unit or the Developer shall submit only one claim of refund under this notification for every quarter:

Explanation.- For the purposes of this notification “quarter” means a period of three consecutive months with the first quarter beginning from 1st April of every year, second quarter from 1st July, third quarter from 1st October and fourth quarter from 1st January of every year.

(g) the SEZ Unit or the Developer who is not so registered under the provisions referred to in clause (c), shall, before filing a claim for refund under this notification, make an application for registration under rule 4 of the Service Tax Rules, 1994.

(h) if there are more than one SEZ Unit registered under a common service tax registration, a common refund may be filed at the option of the assessee.

(IV) The SEZ Unit or Developer, who intends to avail exemption or refund under this notification, shall maintain proper account of receipt and use of the specified services, on which exemption or refund is claimed, for authorised operations in the SEZ.

4. Where any sum of service tax paid on specified services is erroneously refunded for any reason whatsoever, such service tax refunded shall be recoverable under the provisions of the said Act and the rules made there under, as if it is recovery of service tax erroneously refunded;

5. Notwithstanding anything contained in this notification, SEZ Unit or the Developer shall have the option not to avail of this exemption and instead take CENVAT credit on the specified services in accordance with the CENVAT Credit Rules, 2004.

6. Words and expressions used in this notification and defined in the Special Economic Zones Act, 2005 (28 of 2005) or the rules made thereunder, or the said Act, or the rules made there under shall apply, so far as may be, in relation to refund of service tax under this notification as they apply in relation to a SEZ.

7. This notification shall come into force on the date of its publication in the Gazette of India

FORM A-1
[Refer condition at S. No. 3 (II)(a)]

Declaration by the SEZ Unit or Developer for availing ab initio exemption under notification No.12/2013- Service Tax dated 1 st July, 2013

1. Name of the SEZ Unit/Developer:

2. Addresses with telephone and Email:

3. Permanent Account Number (PAN) of the SEZ Unit/Developer:

4. Import and Export Code Number:

5. Jurisdictional Central Excise/Service Tax Division:

6. Service Tax registration number/Service Tax code/ Central Excise registration number:

7. Declaration: I/We hereby declare that-

(i) The information given in this application form is true, correct and complete in every respect and I am authorised to sign on behalf of the SEZ Unit/Developer;

(ii) I/We maintain proper account of specified services, as approved by the Approval Committee of SEZ, received and used for authorised operations in SEZ; I/we shall make available such accounts and related records, at all reasonable times, to the jurisdictional Central Excise officers for inspection or scrutiny.

(iii) I/We shall use/have used specified services for authorised operations in the SEZ.

(iv)I/We declare that we do not own or carry on any business other than the operations in SEZ [where this item is not applicable, declaration may be submitted after striking out the inapplicable portion];

OR

I/We declare that we also own/ carry on any business in domestic tariff area as per the details furnished below:

Table I

S. No.	Name of the unit owned in DTA	Output services provided by DTA Unit	Goods manufactured by the DTA unit

(v)I/We are aware that the declaration is valid only for the purpose specified in notification 12/2013-Service Tax dated 1st July, 2013 and is subject to fulfillment of conditions.

(vi) I/We intend to claim ab initio exemption on the specified services mentioned in the following Table:

Table II

Sl.No.	Specified service(s) to be received for the authorised operation	Details of service provider(s) who provide(s) the specified service(s), for SEZ authorised operations
		Name and address	Service Tax registration No./(“self” in case of service on which service tax is paid on reverse charge)
(1)	(2)	(3)	(4)

(vii) I/We undertake that in case the services on which exemption has been claimed were not exclusively used for authorised operation or were found not to have been used exclusively for authorised operation, we shall pay to the government an amount that is claimed by way of exemption from service tax along with interest as applicable on delayed payment of service tax under the provisions of the said Act read with the rules made thereunder.

Signature and name of authorised person with stamp

Date:

Place:

I have verified the above declaration; it is correct

Signature, date and stamp of the Specified Officer of the SEZ Unit /Developer (Specified Officer shall retain a copy of the verified declaration, for the purpose of record)

FORM A-2
[Refer condition at S. No. 3 (II)(b)]

Authorisation for procurement of services by a SEZ Unit/Developer for authorised operations under notification No.12/2013- Service Tax dated 1 st July, 2013

A: Details of SEZ Unit/Developer:

1. Name of the SEZ Unit/Developer:

2. Address of the SEZ Unit/Developer with telephone and email:

3. Permanent Account Number (PAN) of the SEZ Unit/Developer:

4. Import and Export Code Number:

5. Jurisdictional Central Excise/Service Tax Division:

6. Service Tax registration number / Service Tax Code/Central Excise registration number:

B: The details of specified services that the SEZ Unit/Developer is authorised to procure in terms of declaration furnished by the SEZ Unit/Developer

Sl.No.	Specified service(s) to be received for the authorised operation	Details of service provider(s) who provide(s) the specified service(s), for SEZ authorised operations
		Name and address	Service Tax registration No.
(1)	(2)	(3)	(4)

(Signature and the stamp of the jurisdictional Deputy Commissioner of Central Excise /Assistant Commissioner of Central Excise)

Phone No:

Fax No.:

FORM A-3[Refer condition at S. No. 3 (II)(d)]

Quarterly return to be furnished by the SEZ Unit/Developer furnishing the details of services procured without payment of service tax in terms of the notification No. 12/2013-Service Tax dated 1st July, 2013

For the Quarter: April-June/Jul-Sep/Oct-Dec/Jan-March Year:

[Tick the appropriate quarter]

1. Name of the SEZ Unit/Developer:

2. Address of the SEZ Unit/Developer with telephone and email:

3. Permanent Account Number (PAN) of the SEZ Unit/Developer:

4. Import and Export Code Number:

5. Jurisdictional Central Excise/Service Tax Division:

6. Service Tax Registration Number / Service Tax Code / Central Excise registration number:

7. We have procured the services as per the details below without payment of service tax in terms of notification No. 12/2013-Service Tax dated 1 st July, 2013

TABLE

S. No.	Description of taxable service	Name and address of service provider	Registration of service provider	Invoice No.	Date	Value of service	Service tax + cess amount claimed as exemption
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Signature and name of authorised person with stamp

Date:

Place:

FORM A-4[Refer condition at S. No. 3 (III)(c)]

Application for claiming refund of service tax paid on specified services used for authorised operations in SEZ under notification No.12/2013- Service Tax dated 1 st July, 2013

ToThe Assistant/Deputy Commissioner of Central Excise/Service Tax _________ Division, _______ Commissionerate

Sir ,

I /We having details as below,-

(i) Name of the SEZ Unit/Developer:

(ii) Address of the SEZ Unit/Developer with telephone and email:

(iii) Address of the registered/Head Office with telephone and email:

(iv) Permanent Account Number (PAN) of the SEZ Unit/Developer:

(v) Import and Export Code Number:

(vi) Jurisdictional Central Excise/Service Tax Division:

(vii) Service Tax Registration Number/Service Tax Code / Central Excise registration number :

(viii) Information regarding Bank Account (Bank, address of branch, account number) in which refund amount should be credited/to be deposited:

(ix) Details regarding service tax refund claimed:

claim refund of Rs.................. (Rupees in words) as per the details furnished in the Table I and Table II below for the period from____________ to______________.

(A) Refund of service tax in respect of service tax paid on specified services exclusively used for the authorised operations in SEZ, as approved by the Approval Committee of the _________ SEZ [ Rupees____________] as per the details below

Table-I

S. No.	Description of taxable service	Name and address of service provider	STC No. of service provider (Indicate “ self” if reverse charge applies to the specified service)	Invoice* No.	Date	Value of service	Service tax +cesses paid
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
	Total amount claimed as refund

*Certified copies of documents are enclosed.

(B) Refund on respect of service tax paid on specified services other than the services used exclusively for authorised operation (used partially for the authorised operations of SEZ Unit/Developer), as approved by the Approval Committee of the _________ SEZ [Rupees ____________].

Table-II

S. No.	Description of taxable service	Name and address of service provider	STC No. of service provider	Invoice* No.	Date	Value of service	Service tax + cess Amt	Amount distributed to the SEZ Unit/Developer out of the amount mentioned at column No. (8)	Document* under which amount mentioned at column (9) was distributed to the SEZ Unit/Developer
								(Claimed as refund)	No.	Date
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)
	Total Amount

*Certified copies of documents are enclosed

2. (i) The turnover of the authorised operation of the SEZ Unit/Developer in the previous financial year:____________________;

(ii) Turnover of the DTA operations in the previous financial year:____________

3. I/We Declare that-

(i) information given in this application for refund is true, correct and complete in every respect and that I am authorised to sign this application for refund of service tax;

(ii) the specified services, as approved by the Approval Committee of SEZ, on which exemption/refund is claimed are actually used for the authorised operations in SEZ;

(iii) we have paid the service tax amount along with the cesses, being claimed as refund vide this application, to the service provider;

(iv) refund of service tax has not been claimed or received earlier, on the basis of above documents/information;

(v) we have not taken any CENVAT credit under the CENVAT Credit Rules, 2004 of the amount being claimed as refund;

(vi) proper account of receipt and use of the specified services on which exemption/refund is claimed, for the authorised operations in the SEZ, is maintained and the same shall be produced to the officer sanctioning refund, on demand.

Signature and name (of proprietor/managing partner/person authorised by managing director of the SEZ Unit/Developer) with complete address, telephone and e-mail.

Date: Place:

[F.No. B1/6/ 2013-TRU]