GST on supply to a SEZ unit by a unit in DTA

[SHIVANSH MEHRA]

Can a unit in DTA supply goods/services to a SEZ unit under a LUT (without any bank guarantee) without paying GST? Or it has to mandatorily supply under a bond (with bank guarantee)

Please quote the relevant notification/law, if possible.

[Rajagopalan Ranganathan]

Sir,

As per section 16 (1) (b) of IGST Act, 2017 supply of goods or services or both to a special Economic Zone Developer or a special Economic Zone Unit will be treated as zero rated supply.

According to rule 96 A of CGST rules, 2017 "any registered person availing the option to supply goods or services for export without payment of integrated tax shall furnish, prior to export, a bond or a Letter of Undertaking in FORM GST RFD-11 to the jurisdictional Commissioner, binding himself to pay the tax due along with the interest specified under sub-section (1) of section 50 within a period of -

(a) fifteen days after the expiry of three months [, or such further period as may be allowed by the Commissioner,] from the date of issue of the invoice for export, if the goods are not exported out of India; or

(b) fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange [or in Indian rupees, wherever permitted by the Reserve Bank of India.

According to rule 96 A (6) "the provisions of sub rule (1) shall apply, mutatis mutandis, in respect of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit without payment of integrated tax.

[PAWAN KUMAR]

Reply given by sh. Rajgopalan sir is correct. An dta may supply goods or services under lut to sez. Dta need to obtain lut or bond in this regard.

AI Summary

Zero-rated supply to SEZ units permits DTA suppliers to export under LUT, subject to bond or LUT procedural conditions. Supply from a Domestic Tariff Area unit to a Special Economic Zone unit is a zero-rated supply that may be effected without payment of integrated tax if the supplier furnishes, prior to export, a Letter of Undertaking or a bond in the prescribed form, with the procedural timelines and liabilities applying mutatis mutandis to SEZ supplies.