Goods and Services Tax – GST – By: – Bimal jain – Dated:- 4-7-2018 – Supplies to SEZ unit/ Developer are Zero-rated Supply: In terms of Section 16 of the IGST Act, 2017, the following supplies of goods or services are considered as zero-rated supply. (Relevant provision of Section 16 is reproduced here in below): 16. (1) zero rated supply means any of the following supplies of goods or services or both, namely:- export of goods or services or both; or supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. (2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply. (3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:- he may supply goods or services or both under bond or Letter of Undertaking
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n the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce. Contrary Judgment by the Advance Ruling: Recently an advance ruling was given by Karnataka bench of Advance ruling authority ( the AR ) in the case of M/s GOGTE INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED; KAR ADRG 02/2018 dated March 21, 2018, pertaining to the following question: Whether the Hotel Accommodation & Restaurant services provided by them, within the premises of the Hotel, to the employees & guests of SEZ units, be treated as supply of goods & services to SEZ units in Karnataka or not? Facts of the case: The authorized representative during the personal hearing proceedings pleaded that applicant is a public limited company; they are into hotel business providing hotel accommodation & restaurant services in Belgaum; that the hotel is situated outside
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ion 16(1)(b) of IGST Act‟ 2017. Rule 46 of CGST Rules 2017 stipulates that the invoice shall carry an endorsement Supply meant for export / Supply to SEZ unit or SEZ Developer for authorized operations on payment of Integrated Tax or Supply meant for Export / Supply to SEZ unit or SEZ Developer for authorized operations under Bond or Letter of Undertaking without payment of Integrated Tax as the case may be. It is clearly evident that the supplies of goods or services or both towards the authorized operations only shall be treated as Supplies to SEZ Developer / SEZ Unit. The place of supply of the services by way of lodging accommodation by a hotel, shall be the location at which the immovable property (hotel) is located or intended to be located, as per Section 12 (3)(b) of the Integrated Goods and Services Tax Act, 2017. The place of supply of restaurant and catering services shall be the location where the services are actually performed, as per Section 12 (4) of the Integrate
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ted supplies. As per the second proviso to Rule 89(1) of the CGST Rules 2017, the application for refund shall be filed by : (a) supplier of goods after such goods have been admitted in full in the SEZ for authorized operations, as endorsed by the specified officer of the Zone; (b) supplier of services along with such evidences regarding receipt of services for authorized operations as endorsed by the specified officer of the Zone. A conjoint reading of the stated provisions reveals that supplies to SEZ developer or SEZ unit shall be zero rated & supplier shall be eligible for refund of unutilized ITC or IGST paid, as case may be, only if such supplies have been received by SEZ developer/unit for authorized operations . As per SEZ Act 2005, authorized operations means operations which may be authorized under sub‑section (2) of section 4 and sub‑section (9) of section 15 of SEZ Act 2005 respectively. The Circular 48 has also affirmed that – Section 7(5)(b) of the IGST Ac
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