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TMI Blog2017 (6) TMI 1393X X X X Extracts X X X X X X X X Extracts X X X X ..... he KVAT Act. With regard to rubber specifically, the provisions of S.R.O No. 753/2011 will be applicable for interstate sales. (b) For the foregoing reasons, it is also clarified that exemptions/concessions to SEZ situated within the State will be governed solely by the provisions to this effect in sub-section (7) of section 6 of the KVAT Act and sale to SEZ will not be deemed export by virtue of interpretations of "export" in the SEZ Act. The clarification No. C3-31297/07.CT dated 15/9/2007, issued earlier is also reconsidered and is modified to the above extent." 2. Petitioners contend that, being dealers registered under the KVAT Act, in the course of their business, they have sold rubber sheets to industrial units in the Special Economic Zones situated outside the state. According to them, in view of Annexure-I clarification issued by the Commissioner for Commercial Taxes, who, at the relevant time, was exercising the powers under Section 94 of the KVAT Act, such sales were to be treated as deemed exports and that input tax credit paid by a dealer in respect of such goods are entitled either for refund under Section 13(2) or set off under Section 13(3) of the KVAT Act. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 4(2) and Section 15(9). Section-4 deals with establishment of Special Economic Zones and approval and authorization to operate to Developer. Sub-section 2 thereof entitles the Board to authorize the Developer to undertake in a SEZ such operations which the central government may authorize. Section 15 deals with setting up of units. Sub-section 9, provides that the Development Commissioner may grant a letter of approval to the person concerned to set up a unit and undertake such operations which the Development Commissioner may authorize and every such operations so authorized shall be mentioned in the letter of approval. In exercise of the powers under Section 4(2), the Central Government have issued Notification dated 27.10.2006 notifying the operations which are to be authorised by the Boards of Approval while approving the authorized operations in the SEZs. A reading of the list attached to the Notification show that the authorized operations enumerated therein relate to development of infrastructural facilities within SEZ and do not relate to manufacture/production or product development. Therefore, it is evident from Section 53 that the concept of territory outside the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sories in a unit located in any special economic zone or for development, operation and maintenance of special economic zone by the developer of the special economic zone, if such registered dealer has been authorized to establish such unit or to develop, operate and maintain such special economic zone by the authority specified by the Central Government in this behalf. (7) The goods referred to in sub-section (6) shall be the goods of such class or classes of goods as specified in the certificate of registration of the registered dealer referred to in that sub-section. (8) The provisions of sub-sections (6) and (7) shall not apply to any sale of goods made in the course of inter-State trade or commerce unless the dealer selling such goods furnishes to the prescribed authority referred to in sub-section (4) a declaration in the prescribed manner on the prescribed form obtained from the authority specified by the Central Government under sub-section (6), duly filled in and signed by the registered dealer to whom such goods are sold." 9. Similarly in the KVAT Act also, provisions for exemption have been made in Section 6(7)(b) which reads as under: "Section 6(7)(b) sale of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods or providing services out of India from a unit in the SEZ. Similarly, the word "import" does not include the bringing of goods into a unit in the SEZ, from the DTA. It is also relevant to note that Section 7 of the SEZ Act that deals with exemption from taxes, duties and cesses does not specifically grant an exemption from Customs duties or CST or State VAT levies. The exemption from State VAT levies is separately contemplated under Section 50 of the SEZ Act and is left to the discretion of the State Legislatures. It is apparent, therefore, that while enacting the SEZ Act, the Parliament did not intend to treat a supply from the DTA to a unit in the SEZ as an export for the purposes of the CST Act or Article 286 of the Constitution. Had the Parliament any such intention, then it would not have been necessary to provide for an exemption from State taxes, levies and duties, at the discretion of State Legislatures for, any sale of goods to an SEZ unit, would have qualified as an export sale for the purpose of the CST Act, and there would have been no necessity for an exemption provision. As a matter of fact, even under the CST Act, through an amendment that was brought in with eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Constitution of India. I, therefore, find against the petitioner on this issue." 11. This judgment of the learned single Judge was challenged before a Division Bench of this Court in W.A No. 2665/2015 and the appeal was dismissed by judgment dated 14.06.2017 12. In the light of the aforesaid statutory provisions and authoritative pronouncement by this Court, conclusion is irresistible that sale by registered dealers like the appellants to units within the SEZ do not qualify to be deemed exports and instead their entitlement, for statutory benefits are governed by the provisions of Section 8 of the CST Act and Section 6 of the KVAT Act. Viewed in that manner, the conclusion as contained in impugned clarification will have to be sustained and we do so. 13. Now what remains is the issue whether the appellants should refund the amounts already refunded to them on the strength of Annexure-I. Annexure-I was issued by the Commissioner in exercise of his powers under Section 94 of the KVAT Act. That Annexure was modified by the Authority which came into existence only by the impugned proceedings. Therefore, until the impugned proceedings were issued, the department was bound by Annex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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