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TMI Blog2019 (12) TMI 1449X X X X Extracts X X X X X X X X Extracts X X X X ..... of supply can only be considered as the location of such goods at the time of delivery effected to the recipient, which is at the Depot at Marayoor, within the State itself. In the case at hand, the location of both the supplier and the place of supply are within one State itself. Therefore the supply of goods in the case is not in two States or in two different Union territories or in a State and in a Union territory, as contemplated under Section 7(1) of the IGST Act. But sub-section (5) of Section 7, especially sub-clause (b) therein, provides that, if the supply of goods is to a SEZ unit, such supply shall be treated to be a supply of goods in the course of inter-State trade or commerce. Further, going by provisions contained in Section 8 of the IGST Act, which determines what is intra-State supply, which provides that, when the location of the supply and the place of supply of goods are in the same State or same Union territory it shall be treated as intra-State supply. In order to ascertain as to where is the place of supply, the provisions contained in Section 10 can be of assistance. [Clause] (c) of Section 10(1) provides that, where the supply does not involve movement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no one can go beyond provisions of the said Acts in order to decide the nature of the supply. From the conclusions arrived, it need to be held clearly that, going by provisions of the IGST Act the supply to a SEZ unit can only be considered as inter-State supply. As long as such supply remains as a zero-rated supply the demand for payment of 18% IGST cannot be sustained. Lastly, yet another contention was raised to the effect that, the proviso to Section 8(1) exempting supply of goods to SEZ unit from the purview of intra-State supply, can be deemed to apply only with respect to a SEZ unit situated within the State itself. For accepting such a contention, something has to be read into the plain and literal meaning of the proviso, which is not at all warranted, because the literal meaning or the intentional meaning would not give rise to any ambiguity or lack of clarity. Further, Section 7(5)(b) would make it clear that despite the location of the supplier and the place of supplier being not within two different States, it should be treated as a supply of goods in the course of inter-State trade, when the supply is made to a SEZ unit. When the rate applicable to such supply is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding that, the transactions in question involves tax liability only at zero-rate . The writ petitioner was given permission to deposit the amounts demanded, excluding the 18% IGST. The writ petitioner was also directed to keep all statutory obligations in the movement of the goods in question to its destination, without any diversion. The appellants are directed to make delivery of the goods within one week from the date on which communication is received from the writ petitioner with respect to remittance of the amounts liable. The above finding is challenged on the basis that, the transaction in question will attract IGST liability not at zero-rate . 5. The writ petitioner in both these cases is a unit situated at the Madras Export Processing Zone (SEZ), Phase-II, Plot B-25, Chennai-45. Documents evidencing registration of the unit as a SEZ unit is produced along the writ petitions. The writ petitioner was required to pay 18% IGST on the value of the goods supplied, by treating the transaction as an inter-State supply of goods, which is leviable with tax as provided under Section 5 of the IGST Act. Contention raised was that, the supply of goods is to a SEZ unit, which can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te supply namely :- (i) supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit; (ii) goods imported into the territory of India till they cross the customs frontiers of India; or (iii) supplies made to a tourist referred to in section 15. (2) Subject to the provisions of section 12, supply of services where the location of the supplier and the place of supply of services are in the same State or same Union territory shall be treated as intra-State supply : Provided that the intra-State supply of services shall not include supply of services to or by a Special Economic Zone developer or a Special Economic Zone unit. Explanation 1. - For the purposes of this Act, where a person has, - (i) an establishment in India and any other establishment outside India; (ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or (iii) an establishment in a State or Union territory and any other establishment registered within that State or Union territory. then such establishments shall be treated as establishments of distinct persons. Explanation 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into or exported from India, shall be as enumerated thereunder. Sub-clause (c) of Section 10(1) provides that, where the supply does not involve movements of goods, whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of delivery to the recipient. 10. In the case at hand, the Sandal Wood stocked in the Depot of the Forest Department at Marayoor was put to auction, by specifying the quantity thereof. On a perusal of the tender notification as well as the conditions incorporated therein, it is revealed that, the successful bidder should take delivery of the goods from the said Depot, on remittance of the requisite amount. Therefore the supply of goods in between the auctioneer and the successful bidder ends up with delivery of goods at the Depot itself. Hence the supply of goods in the case at hand does not involve any movement of goods. Therefore, going by Section 10(1)(c) of the IGST Act, the supply of goods in the case at hand is a supply which does not involve movement of goods. Therefore the place of supply can only be considered as the location of such goods at the time of delivery effected to the recipient, which is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case will be concluded by effecting delivery of the goods to the recipient at the Depot in question. Since the location of the goods at the time of delivery by the recipient is the Depot at Marayoor, the place of supply is also within the State. Hence it can safely be concluded that the location of the supplier and the place of supply of goods are within the State of Kerala itself. Therefore the supply of goods in the case will come within the purview of the intra-State supply as determined in Section 8(1) of the IGST Act. But the proviso to the said section contains few exemptions. One among such exemption provided under [clause] (i) of the proviso to Section 8(1) is with respect to supply of goods to a Special Economic Zone Unit. The proviso says that supply of goods to a SEZ Unit shall not be treated as intra-State supply. Therefore it can be treated only as an inter-State supply, especially when Section 7(5)(b) provides that supply of goods to or by a Special Economic Zone Unit should be treated to be a supply of goods in the course of inter-State trade. From the above quoted provisions of law, it has to be held that the supply of goods involved in the present case is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case at hand is totally different. The instance of taxation or the taxable event is the supply of goods contemplated under the IGST Act. It is specifically provided that supply of goods made to a SEZ unit is an inter-State supply. Further it is also evident from the provisions that, despite the location of the supplier and the place of supply is within the State itself, it cannot be treated as an intra-State supply, because the supply is made to a SEZ unit. Going by provisions contained in the IGST Act, the inter-State supply in the instant case is a zero rate supply . Therefore, there exists no tax liability involved in the supply of goods. That being the position, coupled with the condition incorporated in the tender that the value of the goods need to be paid only with applicable tax, would make it clear that the tenderer is not liable to pay any tax at 18%. Such a rate is not at all applicable with respect to the supply of goods involved. 15. Dr. Thushara James, Learned Government Pleader appearing for the appellants, raised a further contention that it is a well settled principle that a sale in the course of inter-State trade has got 3 ingredients such as (i) a contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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