Purchase Return From SEZ Area to DTA

[peter john]

Dear Sirs,

Warm Wishes, In an SEZ Purchase,

The purchases from DTA will be exempted through ARE 1 for excise duties and the VAT/CST is exempted.

In case of Rejection by SEZ Unit, the excise duty is applicable as the materials purchased by SEZ on basis of Exemption through ARE 1.

Is VAT/CST to be collected by SEZ Unit from the DTA Unit at the time of Removal of Rejection?

Kindly clarify.

Thanks

Peter

AI Summary

Tax Implications of Returning Rejected Goods from SEZ to DTA: No VAT/CST Collection Required Under TNVAT Act A query was raised regarding the tax implications of returning rejected goods from a Special Economic Zone (SEZ) unit to a Domestic Tariff Area (DTA) unit. The initial concern was whether VAT/CST should be collected by the SEZ unit when goods are returned due to rejection, given that purchases from DTA to SEZ are exempt from these taxes. A response clarified that under the TNVAT Act and associated rules, there is no provision for collecting VAT/CST in such cases. Additionally, the SEZ would not issue Form I for the rejected amount.