GST on reverse charge on GTA in respect of supply to SEZ units.

[HARISH RADHAKRISHNAN]

I am a unit in the SEZ and I have received goods in the SEZ through the local transport bill is more than rs 1500. I am now supposed to pay tax on reverse charge basis on the GTA charges.

As an SEZ I am eligible for an exemption from tax as the supply to SEZ is ZERO RATED for which the Service provider i.e. transport operator in this case should execute a bond for claiming the exemption.

However in terms of the RCM procedure the SEZ unit is the service provider hence this is a case of supply of service to yourself and therefore not taxable at the hands of the SEZ unit . In case this is not a correct position to hold can the SEZ unit use his SEZ Bond cum LUT for claiming this exemption.

Thanks

[Alkesh Jani]

Sir,

In this regards, my point of view is that, supplies to SEZ unit or a Developer is treated as inter-state supplies. In terms of Notification 13/2017-CT (Rates) dated 28.06.2017, as amended from time to time, the recipient of service is liable to pay tax, here it is important to note that the said Notification is issued under Section 9(3) of CGST Act,2017 and same is stated below for clarification:-

“3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to suchrecipient as if he is the person liable for paying the tax in relation to thesupply of such goods or services or both.”

From above it is clear that, SEZ unit or a Developer is the person liable for paying tax and all the provisions of the Act shall be applicable to SEZ unit or Developer. Therefore, in the instant case, you are required to obtain LUT or pay the tax and apply for refund.

Further, the SEZ Bond cum LUT, executed by you is under the SEZ Act and Customs Act. Therefore, in my point of view, it cannot be said that provisions of GST Act are adhered.

Any alternate views are solicited.

Thanks

[KASTURI SETHI]

I support the views of Sh.Alkesh Jani, Ji.

[subramanian vijayakumar]

I agree with the views

[DR.MARIAPPAN GOVINDARAJAN]

I also endorse the views of Sri Alkesh.

AI Summary

Reverse charge on transport to SEZ units requires the SEZ recipient to obtain LUT or pay tax and claim refund. Reverse charge liability attaches to GTA services for supplies to SEZ units treated as inter state supplies; the SEZ recipient is liable to pay tax under the notification and must furnish a valid GST LUT for zero rated supplies or pay the tax and apply for refund. The SEZ Bond cum LUT executed under the SEZ Act and Customs Act does not substitute for GST compliance regarding LUT or payment/refund for reverse charge liability.