Zero-rated supply treatment for SEZ supplies governs tax payment or refund under the Integrated Goods and Services Tax Act.

Supplies of goods and on-site services made to Special Economic Zone units and developers are treated as zero-rated supply under section 16 of the Integrated Goods and Services Tax Act, 2017. On the stated facts, the supplier may either effect the supply without payment of tax subject to the statutory conditions or make the supply on payment of tax and claim refund under the provision. Tax liability is therefore governed by the zero-rated supply framework applicable to SEZ supplies.

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Issues: Whether supplies of goods and on-site services made to Special Economic Zone units or Special Economic Zone developers are zero rated under section 16 of the Integrated Goods and Services Tax Act, 2017, and whether tax is payable on such supplies.

Analysis: Section 16 of the Integrated Goods and Services Tax Act, 2017 treats supplies of goods or services to a Special Economic Zone unit or a Special Economic Zone developer as zero rated supply. On the facts placed before the Authority, the applicant stated that the supplies were made only to SEZ units and SEZ developers. The ruling proceeded on that basis and recognised that the supplier could either make the supply without payment of tax in accordance with the statutory conditions or make the supply on payment of tax and claim refund as permitted by the provision.

Conclusion: Supplies to SEZ units and SEZ developers fall within the statutory scheme of zero rated supply under section 16, and the tax liability is governed by that provision.

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