Applicability of LUT for sale between SEZ Units

[RAVI ANJANEYULU]

Do we need to take the LUT, from sales being made to one SEZ unit to other SEZ Unit. Please specify the relevant provisons in support of the above.

[KASTURI SETHI]

Dear Ravi Ji,

Answer is, 'NO'. My reply is based on common knowledge and experience.

The purpose of LUT and Bond is to safeguard Govt. revenue (Duty/Taxes) in the event of any mis-happening due to natural calamity or human error. . The clearance made to SEZ are treated as export. Exported goods are treated as duty/tax paid goods irrespective of the fact whether the goods are exported without payment duty/tax under bond/LUT or payment of duty.

Now since the goods lying in SEZ are duty paid, the Govt. revenue is already safe in the hands of SEZ unit because of the Govt. policy on export. We can infer that one SEZ unit is clearing duty-paid goods (being exported) to another SEZ unit.

On the ground that tax/duty of Govt. is already safeguarded, there is no requirement of LUT or Bond for clearing the goods from one SEZ unit to another SEZ unit.

AI Summary

LUT requirement for SEZ-to-SEZ supplies is unnecessary as export-treated clearances already safeguard government revenue. LUT or bond is not required for supplies from one SEZ unit to another SEZ unit because clearances to and transfers within SEZs are treated as export-related movements and goods in SEZs are regarded as duty-paid; the Government's tax revenue is therefore considered safeguarded, removing the revenue-protection purpose of obtaining a fresh LUT or bond for intra-SEZ transfers.