As per section 16 of IGST Act, supplies made to SEZ units & SEZ developers are treated as “zero rated supply”. But in the recent decision of AAR West Bengal in the case of Garuda Power Private Limited has ruled that :
The Applicant shall be liable to pay tax when supplying to Units and Developers of Special Economic Zones subject to the provisions of section 16 of the Integrated Goods and Services Act, 2017.
I request to learned friends to throw light on the meaning of ruling by AAR
Suppliers to SEZs Can Choose Zero-Rated Supplies or Pay GST and Claim Refund, Says AAR per IGST Act Sec 16 A query was raised regarding the tax implications of supplying goods to Special Economic Zone (SEZ) units and developers under the Goods and Services Tax (GST) framework. According to Section 16 of the Integrated Goods and Services Tax (IGST) Act, such supplies are considered 'zero-rated.' However, a ruling by the Authority for Advance Rulings (AAR) in West Bengal indicated that the supplier must pay tax when supplying to SEZs, but can claim a refund. The discussion clarified that suppliers can either supply without paying tax under a bond or pay tax and claim a refund later, as per the provisions of the IGST Act. (AI Summary)
TaxTMI 
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