Question ID :
37992
SEZ UNIT
I have read in the Back Ground material on GST that supply to SEZ "for use in authorised operations". But Sec 16 if IGST Act does not says so. We are actually constructing as Shed of a factory of SEZ unit. Will it be treated as zero rated or not.
Posted by
VIPIN GUPTA
on
Feb 20, 2019
Filed Under
GST
Supply to SEZ is not the same as Ship to SEZ. Contrasted with 'export of goods' which is when goods are physically carried out of India. Supply to SEZ would need to be understood in the context of explanation through the Rules. You are right, Rules do not guide the Act but the Rules provide Government's view of what it means to 'supply to SEZ'?
Supply to SEZ, pre-GST, was regulated by allowing duty-free entry into zone based on end-use approval. Now, this end-use monitoring is placed in the hands of tax payers (Supplier and Unit) to self-regulate. And the guidance for such self-regulation is found in the Rules in the form of 'entry into authorized operations' (please see second proviso to rule 89. Guidance is gleaned from rule 89 because supply to SEZ is meaningless if the DTA-Supplier is not eligible for zero-rated benefit.
Construction of shed inside the zone for a Customer who is licensed as a zone-unit, WILL BE ELIGIBLE for zero-rated benefit. As this contract is a works contract (treated as supply of services) is already pre-approved under uniform list of services which are eligible for zero-rated benefit (please see sl. no. 55 in list published by Government in http://sezindia.nic.in/upload/uploadfiles/files/Uniformlist.pdf)
Word of caution, please ensure that you (DTA-Supplier) have a direct contract with SEZ unit (as Customer paying for your supplies).
Posted by
CA. JATIN CHRISTOPHER A on
Feb 22, 2019