Zero-rated supply to SEZ unit covers logistics and cargo handling services used for authorised operations.

Services provided to a Special Economic Zone unit for authorised operations, including loading, transportation to railway siding, stacking, rake loading and related activities, were treated as cargo handling linked to the unit's manufacturing activity. Because supplies to an SEZ unit for authorised operations are zero-rated and are deemed inter-State supplies under the IGST framework, the services were held to be zero-rated and inter-State in nature. The question of the taxable GST rate did not arise.

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Issues: Whether logistics services comprising loading of bauxite, transportation to railway siding, stacking, rake loading and ancillary activities supplied to a Special Economic Zone unit are taxable under GST or qualify as zero-rated supply, and whether such supply is inter-State in nature.

Analysis: The recipient was found to be a Special Economic Zone unit holding a valid approval for authorized operations. The nature of the services, on the work order and the approved default list of services for SEZ operations, was treated as cargo handling connected with the unit's manufacturing activity. Supplies made to or by a Special Economic Zone developer or unit are treated as inter-State supplies under the Integrated Goods and Services Tax Act, and supplies of goods or services for authorized operations to an SEZ unit constitute zero-rated supply.

Conclusion: The services supplied to the SEZ unit were held to be zero-rated supply and the supply was held to be inter-State in nature; the question of taxable GST rate did not arise as such.

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