2018 (8) TMI 212 - AAR - GST

Levy of GST - supply of goods or services to SEZ unit or SEZ developer - IGST Act - Whether or not the supply of goods and on-site services to customers in SEZ area to any SEZ unit or SEZ developer is zero rated supply under section 16 of the Integrated Goods & Services Tax Act, 2017? - whether GST is chargeable for the supply of goods or services to SEZ unit or SEZ developer? Held that - Section 16 of IGST Act deals with zero rated supply which includes the supply of goods and services or both to a Special Economic Zone Unit or a Special Economic Zone Developer - Since the Applicant supplies to units and developers of Special Economic Zones only, the provisions of Section 16 of IGST Act will be applicable in this case and the tax liability will be at zero rate under sub section 1(b) of the IGST Act - He may supply without paying tax subject to the provisions under section 16 (3) (a), or he may supply on payment of tax and claim refund subsequently under section 16 (3) (b) of the IGST Act. Ruling - The Applicant shall be liable to pay tax when supplying to Units and Developers of Special Economic Zones subject to the provisions of Section 16 of the Integrated Goods and Services Act, 2017.

Summary

Issues:
1. Whether the supply of goods and on-site services to customers in SEZ area to any SEZ unit or SEZ developer is zero-rated supply under section 16 of the Integrated Goods & Services Tax Act, 2017.
2. Whether GST is chargeable for the supply of goods or services to SEZ unit or SEZ developer.

Analysis:
1. The Applicant, a dealer of Cummins India Limited, sought a ruling on the tax liability for supplying goods and services to SEZ units or developers. The Applicant inquired about the zero-rated supply under section 16 of the IGST Act and whether GST is applicable to these transactions. The Advance Ruling Authority found the questions admissible under section 97(2) (e) of the GST Act as they were not previously decided by any authority. The Application was admitted for further consideration.

2. The Applicant clarified during the hearing that they supply diesel engines and spare parts, along with services, exclusively to SEZ units and developers. Section 16 of the IGST Act pertains to zero-rated supply to SEZ units or developers. As the Applicant's supplies are solely to SEZ entities, the provisions of section 16 of the IGST Act apply. The tax liability for these transactions will be at zero rate under sub-section 1(b) of the IGST Act. The Applicant may choose to supply without tax payment under section 16 (3) (a) or pay tax and claim a refund later under section 16 (3) (b) of the IGST Act.

Judgment:
The ruling stated that the Applicant is liable to pay tax when supplying to SEZ units and developers in accordance with the provisions of Section 16 of the Integrated Goods and Services Tax Act, 2017. The ruling remains valid unless declared void under Section 104(1) of the GST Act.