Zero-rating for SEZ sales sustained where statutory conditions were met and refund reversal was held unsustainable.

Sales to a registered dealer located in a Special Economic Zone qualified as zero-rated under section 18(1) of the Tamil Nadu Value Added Tax Act, 2006 because the statute includes sales to SEZ dealers and sales covered by section 5(1) and 5(3) of the Central Sales Tax Act, 1956. On the admitted facts, the goods were exported and the statutory conditions for zero-rating were met, so the refund and input tax credit already granted could not be reversed. The challenge to the Single Judge's relief therefore failed, and the assessee remained entitled to zero-rating.

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Issues: Whether the sales made to a registered dealer located in a Special Economic Zone, and treated as export-related sales, qualified for zero-rating under the Tamil Nadu Value Added Tax Act, 2006 so as to entitle the dealer to input tax credit or refund and prevent reversal of the refund already granted.

Analysis: Section 18(1) of the Tamil Nadu Value Added Tax Act, 2006 treats specified sales as zero-rated, including sales falling under sub-sections (1) and (3) of Section 5 of the Central Sales Tax Act, 1956 and sales to a registered dealer located in a Special Economic Zone. The sale in question was made to a unit located in the Special Economic Zone, and the goods were exported without dispute. In that factual setting, the statutory conditions for zero-rating were satisfied, and the attempt to reverse the refund on the premise of ineligibility reflected a reading of Section 18. The appellate authority therefore had no basis to interfere with the relief granted by the Single Judge.

Conclusion: The challenge failed. The sales were entitled to zero-rating and the reversal of refund/input tax credit was unsustainable, in favour of the assessee.

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