GST on Supply in SEZ in case of Bill to Ship to transactions

[Mehul Pandya]

A got contract from SEZ unit for supply and erection of factory shed within SEZ area. A gives sub contract to B. Both A and B located outside SEZ area. Now the query is A wants B to Supply goods and services directly into SEZ area using Bill to Ship to Transactions without payment of IGST under zero rated supply.

So whether is it possible according to GST law for B to supply to A as Consignee and Delivery at SEZ unit without payment of IGST ?? or B have to pay CGST - SGST.

[KASTURI SETHI]

"Bill to -ship to" is not applicable in this scenario. It is inter-State supply of service.A should pay IGST and claim refund.

[Mehul Pandya]

CAN 'B' SUPPLY WITHOUT IGST CONSIDERING PLACE OF SUPPLY PROVISIONS AS SERVICE SUPPLIED TO SEZ UNIT AND RELATED TO IMMOVABLE PROPERTY. BECAUSE

Generally, the place of supply of services is the location of the service recipient.

Special provisions have been made to determine the place of supply for the following services:

Services related to immovable property

[KASTURI SETHI]

Answer is 'NO'.Sub-contractor is an agent of main contractor. Sub-contractor works for and on behalf of main contactor. Hence SEZ unit is concerned with A only.

[YAGAY andSUN]

In our view, if terms of contract/agreement allows subcontractor to supply of goods for installation/erection in SEZ Unit/Developer then the Subcontractor will definitely supply the goods on LUT without charging of IGST, if such work duly falls under the authorized operations of SEZ Unit or Developer.

[YAGAY andSUN]

This transaction would be a direct supply of goods and service by the subcontractor.

AI Summary

GST 'Bill to Ship to' Rules for SEZ: Subcontractor IGST Liability and LUT Options Explored A discussion on the applicability of GST in a 'Bill to Ship to' transaction involving a subcontractor supplying goods and services to a Special Economic Zone (SEZ) was initiated. The primary question was whether the subcontractor could supply directly to the SEZ without paying IGST. Responses varied: one suggested that IGST should be paid and then refunded; another emphasized that the subcontractor, being an agent of the main contractor, should not bypass IGST. However, it was also noted that if the contract allows, the subcontractor might supply under a Letter of Undertaking (LUT) without IGST, provided it aligns with SEZ operations.