whether supplies to a Special Economic Zone (SEZ) qualify as “zero-rated supplies” when the “Bill to” party is located outside India and the “Ship to” party is located within an SEZ in India

[Hemlata Agarwal]

Whether supplies to a Special Economic Zone (SEZ) qualify as “zero-rated supplies” when the “Bill to” party is located outside India and the “Ship to” party is located within an SEZ in India. The tax invoice will issue to the Foreign Party, whose registered office is located outside India, while listing the SEZ unit as the consignee. Payments for these supplies will be received by the Company in convertible foreign currency.

 

AI Summary

Bill-to/ship-to supplies to SEZ raise competing zero-rating analyses under IGST, centered on recipient identity, place of supply, and authorised operations.
Bill-to/ship-to supplies invoiced to a foreign party and delivered to an SEZ unit raise competing zero-rating analyses. One view treats supply to an SEZ for authorised operations as independently zero-rated, with LUT or tax-payment-and-refund options subject to SEZ endorsement and documentation. The contrary view applies the bill-to/ship-to place-of-supply rule, regards the foreign party as the deemed recipient, and distinguishes goods from services because goods delivered to an SEZ do not leave India. This view identifies possible dispute risk over zero-rating of goods.