Supply to SEZ

[Kaustubh Karandikar]

XYZ is having a ‘Sweets and Namkeen’ shop. They supply these items to the SEZ unit either by 1) delivering these items to SEZ unit by their own tempo or 2) a representative of SEZ unit is coming to the shop and personally collecting the items. Under both the situations, the invoice is issued by XYZ in the name and address of the SEZ unit. Can XYZ supply these items to SEZ unit without payment of GST under LUT under both the situations?

[Rajagopalan Ranganathan]

Sir,

How XYZ will prove that sweets and namkeen are used in the course of or furtherance of business? If XYZ is able to prove that they can supply these items without payment of GST under LUT.

[Adarsh Sharma]

In the case of COFFEE DAY GLOBAL LIMITED Advance Ruling No. KAR ADRG 13/2018, dated 26-7-2018 2018 (15) G.S.T.L. 718 (A.A.R. - GST) = 2018 (8) TMI 875 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA it was decided that The supply of non-alcoholic beverages/ingredients to such beverages, to SEZ units using coffee vending machines by the applicant, do not qualify as zero-rated supply, as defined under Section 16 of the IGST Act, 2017.

If we apply the above AAR, XYZ supply will not qualify as zero-rated supply

[YAGAY and SUN]

The Unit/developer in SEZ do have LOP, LOI, Registration Certificate from Development Commissioner and tax exemption are available for the goods which are only for authorized used/purpose against which export obligation is required to be fulfilled along with NFE. Selling Snacks/Sweet and Namkeens will be in SEZ unit's in LOP/LOI, therefore, in our opinion, no GST exemption will be available and goods would be supplied on payment of applicable Taxes.

[YAGAY and SUN]

We do endorse the view of Experts.

AI Summary

Zero-rated supply to SEZ units: retail supplies like snacks may be taxable absent proof of authorized SEZ use.
Whether supplies of sweets and namkeen to an SEZ unit qualify as zero-rated supply hinges on the supplier proving the goods are for authorized SEZ use or in the course of/for the furtherance of business; precedent on retail-type supplies to SEZ vending machines disfavors zero-rating, and SEZ tax exemptions apply only to goods for authorized purpose subject to export obligations and NFE.