SEZ Made sale to Merchant Exporter 0.1% Sales - Who has to pay tax

[Rajendra Prasad]

Dear Sir,

SEZ made Sale to Merchant Exporter. Who has to pay GST on it. SEZ Unit or Buyer from SEZ unit.

[Alkesh Jani]

Sir,

As per your query, my point of view is, the Notification No. 40/2017-CT (Rate) dated 23.10.2017, is not applicable to Supplies made by SEZ Unit or Developer. As the exemption is extended for "Intra-State" Supply, where as supply made to or by SEZ is Inter-state supply as per Section 7(5)(b) of IGST Act.

Further, When supplies are made by SEZ unit to DTA, it is govern by SEZ Act, and said supply will be import for DTA Unit.

Therefore, SEZ Unit shall supply the said goods to DTA Unit as per SEZ Act and DTA unit may export the said goods and can claim the refund of IGST Paid.

Thanks,

[Alkesh Jani]

Sir,

In continuation of reply above, the Notification No.41/2017-IT (Rates) dated 23.10.2017, whereby exemption is provided for "Inter-State" supply of goods, here, the DTA unit will file Bill of Entry and can quote for Notification No. for applicable IGST.

Thanks

AI Summary

Inter-state supply treatment applies to SEZ sales, shifting GST incidence to the importer/DTA and enabling IGST refund. Notification No. 40/2017-Rates does not apply to supplies by SEZ units because it covers intra state supplies, while supplies to or by an SEZ are inter state under Section 7(5)(b) IGST. Supplies from an SEZ to a DTA unit are treated as imports governed by the SEZ Act; the DTA importer discharges IGST on import, may quote the relevant inter state exemption notification where applicable, and can claim refund of IGST when the goods are exported.