Supply to SEZ

[Ethirajan Parthasarathy]

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

AI Summary

Zero-rated supply to SEZ units: supplier may supply under LUT or pay IGST and claim refund.
Supplies to SEZ developers or units are classified as zero-rated supply and treated as inter state supplies; suppliers may either supply without payment of integrated tax under a Letter of Undertaking or bond and claim refund of unutilised input tax credit, or supply on payment of integrated tax and claim refund of the tax paid under the statutory refund procedure and applicable rules.