Services supplied to SEZ

[Kaustubh Karandikar]

XYZ supplying services to SEZ for transportation of goods by Sea for Export. In relation to this, XYZ procures services from Shipping Line and shipping line charging Ocean Freight (without GST) and other charges (with GST). XYZ in turn recovering these charges from SEZ and charging Ocean Freight with mark - up (without GST) and other charges (with GST). Can XYZ claim exemption from GST for other charges also being services supplied to SEZ? If yes is XYZ required to procure LUT? In my view, XYZ can claim the exemption being supplied to SEZ subject to getting LUT. Views of the experts please.

AI Summary

Discussion on GST for SEZ Services: Zero-Rated vs. Exempt; Importance of Letter of Undertaking (LUT) Clarified XYZ is providing transportation services to a Special Economic Zone (SEZ) and is charged ocean freight without GST and other charges with GST by the shipping line. XYZ recovers these charges from the SEZ, applying a markup on ocean freight without GST and other charges with GST. The discussion revolves around whether XYZ can claim a GST exemption for these charges as services supplied to SEZ, requiring a Letter of Undertaking (LUT). Participants clarify that such supplies are zero-rated, not exempt, and require an LUT. It is emphasized that zero-rated and exempt services are distinct under GST regulations.