Service Tax Confusion: Should SEZ Clients Pay for Manpower Services or Claim Refunds?

Hi Friends,

With reference to the notification issued on 1st March '11 and the subsequent clarification issued on 18th May '11 regarding the service tax applicability on SEZ units, I need clarification on whether a contract manpower service provider shall charge service tax to its client operating in SEZ. In cases where the client has multiple operations in and outside the SEZ, and the manpower service provider is registered outside the SEZ. Also, manpower recruitment and supply agency's service under sub-clause 'K' of clause 105 of Section 65 of the Finance Act is not listed in clause (ii) of sub-rule 1 of Rule 3 of the Export of Service Rule 2005.

Service Tax Query

The question is: Should the manpower management vendor charge service tax, and then the client claim a refund, or should the vendor not charge service tax at all? Kindly assist.

Regards,

Based on the specific scenario described, the service tax applicability on SEZ units can be complex. In this case, it is advisable to consult with a tax expert or legal advisor well-versed in labor laws and taxation regulations in India. They can provide tailored guidance considering the nuances of the situation, ensuring compliance with the relevant laws and regulations. Additionally, engaging directly with the tax authorities for clarification on the specific applicability of service tax in this context could also be beneficial to avoid any potential issues in the future.