GST on freight charges

[Kaustubh Karandikar]

Goods are supplied to SEZ under LUT without payment of GST. Subsequently, Debit Note is issued to the customer towards recovery of freight charges in relation to this supply. Is GST required to be paid against such recovery?

[SUSHIL BANSAL]

Sir,

Supplies of goods or services or both to SEZ units are treated as exports supplies and hence zero rated supplies.

[Shilpi Jain]

A debit note is issued in cases where the taxable value in the tax invoice issued is lower. So the issue of debit note is not for a new supply but is only to enhance the value of the old supply.

So the same treatment as given for the tax invoice will be applicable for the debit note in the instant case.

AI Summary

Zero-rated supplies: freight recovery via debit note retains export treatment under LUT, no additional tax. Supplies to SEZ units are treated as zero-rated supplies. A debit note issued to enhance the taxable value of an earlier invoice does not constitute a new supply but adjusts the original supply; therefore the debit note inherits the tax treatment of the original invoice and, where that supply was zero-rated under LUT, the freight recovery reflected in the debit note is treated similarly.