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

[YAGAY and SUN]

Dear Peter,

There is no such Provision in the TNVAT Act read with Rules made there under. However, Form I to the extent of rejection amount would not be issued by the SEZ.

Regards,

YAGAY and SUN

(Management, Business & Indirect Tax Consultants)

[peter john]

Thank you sir

AI Summary

VAT collection on SEZ purchase rejections not mandated; Form I withheld and excise duty remains payable.
Whether VAT/CST must be collected by an SEZ unit from a DTA supplier when goods supplied to the SEZ under ARE 1 exemption are rejected and returned. The reply states no provision in the VAT statute or rules requires VAT/CST collection; the SEZ unit will not issue Form I for the rejection amount, while excise duty consequences arise from reversal of the ARE 1 exemption.