Supply of Service to SEZ without LUT and Without Payment of Tax

[KUMAR Narasimhan]

Mr A does a Service to SEZ without payment of Tax, however he don't have LUT, since from FY 17-18 to 18-19. He filed all his return without LUT and without payment of Tax.

From 19-20 to 20-21 he has not filed his return and LUT also not applied for this period..

Now it has been identified.

Question

Now through DRC-03 the tax amount to be paid for FY 17-18 to 18-19 along with Interest.(Refund can't be claimed, because 2 year due date to claim refund is expired)

With respect to 19-20 to 20-21, those invoices were unprocessed till now, if possible these Invoices were processed in April 2021 along with the interest and we can go for a refund claim?

LUT applied for the FY 21-22.

Please clarify sir.

[KASTURI SETHI]

Yes. You can apply for refund claim 19-20 and 20-21. Go through relevant portion of

Circular No. 37/11/2018-GST, dated 15-3-2018

 

4. Exports without LUT: Export of goods or services can be made without payment of integrated tax under the provisions of rule 96A of the Central Goods and Services Tax Rules, 2017 (the CGST Rules). Under the said provisions, an exporter is required to furnish a bond or Letter of Undertaking (LUT) to the jurisdictional Commissioner before effecting zero rated supplies. A detailed procedure for filing of LUT has already been specified vide Circular No. 8/8/2017 –GST dated 4th October, 2017. It has been brought to the notice of the Board that in some cases, such zero rated supplies have been made before filing the LUT and refund claims for unutilized input tax credit have been filed.

4.1. In this regard, it is emphasised that the substantive benefits of zero rating may not be denied where it has been established that exports in terms of the relevant provisions have been made. The delay in furnishing of LUT in such cases may be condoned and the facility for export under LUT may be allowed on ex post facto basis taking into account the facts and circumstances of each case.

[KUMAR Narasimhan]

Dear Sir,

Thank you for the Information.

I am having another clarification also,

If suppose the Invoices pertains to FY 19-20 to FY 20-21 as been processed without payment of Tax in APRIL 2021 would there be any consequence? If so please guide me sir.

[Shilpi Jain]

You need not pay tax for the sez supply just because there was no lut applied. It is only a procedural requirement. Pls write to the department for condoning the procedural lapse as per the mater circular on refund. 125/2019

[KUMAR Narasimhan]

Thank you so much for the Information Mam

[KASTURI SETHI]

Yes.Circular No. 125/44/2019-GST, dated 18-11-2019 (Para No.44) will also be useful in respect of your query against Issue ID 117225.

AI Summary

Zero-rated supply without LUT may be condoned, enabling ex post facto zero-rating and refund claims. Supply to SEZ without a Letter of Undertaking may be regularised: tax for earlier periods can be paid with interest (e.g., via DRC-03), and refund claims for later unprocessed periods may be allowed. Circulars permit condonation of delayed LUT filing and recognition of zero-rated supplies ex post facto, treating the lapse as procedural and enabling refund or zero-rating relief subject to conditions.