TaxTMI 
TaxTMI 
TaxTMI 
Introduction: There are several flaws on this requirement itself whereas demands by way of show cause notices are raised for huge taxes even today in Tamil Nadu despite the fact that this issue was promptly addressed by the Madras High Court on 06/11/2023 itself in the matter of M/s. Lenovo (India) Pvt. Ltd., rep. by its Authorized Signatory Mr. Seiyadou Ahamadou Versus The Joint Commissioner of GST (Appeals-1) O/o. the Commissioner of GST & Central Excise (Appeals-I), The Assistant Commissioner of GST and Central Excise, Division I, Puducherry Commissionerate, The Central Board of Indirect Taxes and Customs, rep. by its Chairman, Union of India - 2023 (11) TMI 774 - MADRAS HIGH COURT. For the benefits of tax officials, tax professionals and DTA suppliers, the key take aways from the above judgement are summarized here below.
No provision: There are no provisions in the act or rules on GST which requires such endorsement. This requirement arises from Rule 30(4) of SEZ Rules which is binding only on SEZ and not on the supplier to SEZ. The rules reads as [(4) A copy of the document referred to in sub-rule (1) or copy of Bill of Export, as the case may be, with an endorsement by the authorised officer that goods have been admitted in full into the Special Economic Zone shall be treated as proof of export and a copy with such endorsement shall also be forwarded by the Unit or Developer to the Goods and Services Tax or Central Excise Officer having jurisdiction over the Domestic Tariff Area supplier within forty-five days failing which the Goods and Services Tax or Central Excise Officer, as the case may be, shall raise demand of tax or duty against the Domestic Tariff Area supplier;] the GST officials apply this rule to all SEZ supplies and insist on payment of IGST at applicable rates wherever the endorsement is not obtained within 45 days.
Applicability: Even the above rule does not have application prior to 18/09/2018 as this rule was substituted only on 19/09/2018, despite the fact that GST is in force since 01/07/2017. The rule read as (4) A copy of the ARE-1 and/or copy of Bill of Export, as the case may be, with an endorsement by the authorized officer that goods have been admitted in full into the Special Economic Zone shall be forwarded to the Central Excise Officer having jurisdiction over the Domestic Tariff Area supplier within forty-five days failing which the Central Excise Officer shall raise demand of duty against the Domestic Tariff Area supplier up to 18/08/2018.
Section 16 of IGST Act: In line with this section, there is no requirement for seeking endorsement by GST officials prior to 30/09/2023 as the requirement FOR AUTHORISED OPERATIONS was made effective prospectively only on 01/10/2023.
Exclusion: For computing the time limits, the period between 01/03/2020 and 28/02/2022 to be excluded in line with Central Tax Notification 13/2022 dated 05/07/2022.
Rue 89 (2) (e) of CGST rules: This rule makes it abundantly clear that endorsement is required only in cases where the supplies are services to a SEZ unit or SEZ Developer. This requirement establishes the fact that so far as supply of goods are concerned, there is no need for any endorsement under GST laws. The rule reads as (e) a statement containing the number and date of invoices, the evidence regarding the endorsement specified in the second proviso to sub-rule (1) and the details of payment, along with the proof thereof, made by the recipient to the supplier for authorised operations as defined under the Special Economic Zone Act, 2005, in a case where the refund is on account of supply of services made to a Special Economic Zone unit or a Special Economic Zone developer;
Rule 46: Rule 46 of the CGST Rules also establishes that the endorsement is required only in cases where refund of GST is sought. In cases where the ITC on supplies to SEZ are adjusted against GST liabilities of taxable supplies, there is no need for any endorsement. The relevant extracts of rule read as Provided further that in the case of the export of goods or services, the invoice shall carry an endorsement 'SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS ON PAYMENT OF INTEGRATED TAX' or 'SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX', as the case may be, and shall, in lieu of the details specified in clause (e), contain the following details, namely,— (i) name and address of the recipient; (ii) address of delivery; and (iii) name of the country of destination:]
It may be noted that Rule 46 is self declaration by supplier and not connected with endorsement as required under rule 30 (4) of SEZ Rules.
In the above case, refund sought by petitioner for the periods December 2019, January 2020 and February 2020 were rejected arbitrarily on the ground that there was no endorsement or endorsement obtained beyond 45 days etc. the high court went in depth on this matter and held categorically that both adjudicating officer as well as first appellate authority committed errors.
The operative portion of the order is reproduced. 17. Thus, in the light of the aforesaid findings, this Court is of the view that both the first and second respondent have committed a serious flaw in the decision making process and therefore, the impugned orders have to be held to be unsustainable. Accordingly, the Writ Petitions are allowed, the impugned orders are set aside and consequently, the second respondent is directed to process the petitioners applications for refund and issue the refund within a period of 30 days from the date of receipt of a copy of this order. No costs.
Conclusion: It may be concluded that there is no requirement for endorsement by authorized officer up to 30/09/2023. Endorsement is required only for supply of services with effect from 01/10/2023 and even as on date, there is no such requirement for supply of goods. Finally, when ITC is adjusted against taxable supplies and no refund is sought, there is no need for any such endorsements.
Disclaimer: This is the understanding derived from the above case law as well as section 16 of IGST Act, Rule 89 (2) (e) of CGST Rules and Rule 46 of CGST Rules. Readers may differ on the above views.