many of which are performed in the advertising agency's office and some which are communicated at the client's office (within the SEZ). If the final presentation for the advertising campaign is delivered in the office of the client within the SEZ, does that satisfy the condition of consumption within the SEZ? Anyone's guess is as good as the author's.

Assuming that one is able to prove that the services are consumed within an SEZ, the benefit received by the service provider is considerably less than that received by a manufacturer that supplies goods to an SEZ. Sales by domestic units to the SEZ are clearly classifiable as `export' of goods. This has been done by appropriately including supply to an SEZ in the drawback rules. This allows the domestic units to claim refund of the excise duty and service tax paid on inputs, capital goods and input services used in manufacture of `exported' goods. However, in case of services, provision of services to an SEZ are not treated as exports as per export of service rules. While the service does not attract service tax, the excise duty on capital goods and service tax on input services becomes a sunk cost. Therefore, services which form about 55% of our country's GDP are at a disadvantageous position when it comes to getting export benefits.

The government needs to streamline the relevant provisions of the SEZ Act and other laws to ensure that SEZ units are not subject to unclear and subjective conditions relating to consumption within an SEZ, and ensure that an SEZ unit can recover all cenvat credits through a simple and transparent mechanism.