Export from SEZ

[SHARAD ANADA]

Registered person of Ahmedabad (Gujarat) place an order to SEZ unit in Kandala (Gujarat). Ahmedabad person without bringing goods to Ahmedabad directly export goods to his customer out side India. So he has not filied Bill of Entry for home consumption. What will be GST implication in transaction between Ahmedabad unit and SEZ unit.

[PAWAN KUMAR]

It will be as zero rated supply and gst invoice to issue mentioning sez as manufacturer. Documents shall be jointly signed.

[KASTURI SETHI]

As per the query, the goods in question stand exported. Hence zero rated supply. I agree with Sh.Pawan Kumar Ji.

Does any relationship exist between Ahmedabad unit and SEZ Unit ? If so, whether GST is applicable ?

If SEZ unit has acted for and on behalf of Ahmedabad unit and if SEZ unit has received consideration in any form from Ahmedabad unit for facilitating it (Ahmedabad unit) for direct export from the premises of SEZ unit to its client located outside India, it will be considered as deemed import of service and Ahmedabad unit will pay IGST under RCM. This is my view.

[PAWAN KUMAR]

Sir as per my view, rcm will not applicable.

It is a supply from sez to dta and on behalf of dta unit, physical export is being done by sez unit directly from his premises. Detailed procedure already prescribed by dgft in a policy circular dates 22 feb 2019, issued for claiming benefits of meis scheme, in case of similar transactions.

[KASTURI SETHI]

Sh.Pawan Kumar Ji,

After re-examination of the issue, I agree with you.

[SHARAD ANADA]

Thank you all the experts for your valuable guidance.

[CSSANJAY MALHOTRA]

Dear Sharad,

Ahemdabad person made purchases from SEZ, which is liable to duties as applicable to import.

Rest is secondary whether Ahemdabad person takes delivery of goods at his premises or to save logistics cost moves goods directly from sez place to port for further export to his customer.

I think that Sh Kasturi ji tried to figure out same initially but reverted to secondary aspect ( supply by Ahemdabad to overseas customer) which is rightly covered as zero rated supply. But initial transaction of purchase of goods by Ahemdabad person from SEZ has to be moved under bill of entry with taxes duly paid. Ensure compliance as without purchase you can't make supply and import duties will be recovered with interest and penal action.

[KASTURI SETHI]

Sh. Sanjay Malhotra Ji,

Sir, Thanks a lot for enlightenment.

[Ganeshan Kalyani]

Welcome Sri Sanjay Sir.

[YAGAY and SUN]

In our view, No GST will be applicable because No Bill of Entry was filed and goods were not removed from SEZ to DTA. Order was placed for exporting of goods out of India only, from SEZ unit. It would also be important to check who received foreign payments from the foreign customer. Registered person can be treated as Commission Agent who procures orders or as a Merchant Exporter.

[CSSANJAY MALHOTRA]

Queriest has not stated that Bill of export has been filed at custom office of SEZ against DTA invoice. In absence of same, B/E is required.

[CSSANJAY MALHOTRA]

Please read phrase at Sr. No. 10 as "Shipping Bill" instead of "Bill of Export" [Refer Section 51 of SEZ Act, which is reproduced below]

Section 51 of SEZ Act: Act to have overriding effect

(1) The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.

AI Summary

Zero-rated supply applies where goods are exported directly from an SEZ, subject to proper invoice and documentation.
Direct shipments from an SEZ to a foreign buyer are treated as zero-rated supply with an invoice naming the SEZ as supplier and export documentation required. If the SEZ acted on behalf of the domestic purchaser and received consideration, the transaction could be a deemed import of service subject to the Reverse Charge Mechanism. Separately, purchases from an SEZ that are moved into the domestic tariff area require a Bill of Entry with duties paid to avoid recovery and penalties.