The Indian Government is to exempt from service tax a number of services received by units located in a Special Economic Zone (SEZ).
The exemption will take the form of a refund of service tax already paid on the specified services received by an
SEZ Unit or an SEZ Developer. An Approval Committee will have to provide a list of services required for any authorized operations, while the Unit or Developer will need to complete relevant declaration forms and retain receipts related to the services received.
A refund claim must be filed within one year from the end of the month in which the original service tax payment was made. Only one refund claim can be made in each quarter.
An SEZ Unit or Developer can opt not to take advantage of this exemption and instead apply for a Central Value Added Tax (CENVAT) credit on the services received. The tax authorities will be able to recover any erroneous refunds.
Source : tax-news.com