2018 (8) TMI 875 – AUTHORITY FOR ADVANCE RULINGS, KARNATAKA – 2018 (15) G. S. T. L. 718 (A. A. R. – GST) – Supplies to SEZ – non-alcoholic beverages – input tax credits relating to SEZ supplies – Whether supply of non-alcoholic beverages to SEZ units using coffee vending machines is in the nature of zero rated supply as defined under Section 16 of the IGST Act 2017? – Held that:- Each SEZ Unit is allowed to carry out predefined activities (termed as 'authorised operations') to be eligible to avail the benefits of being in the Special Zone. The activities to be carried out have, therefore, to be strictly in consonance with the authorized operations certified by the proper office of the SEZ. Though the IGST Act, in Section 16(1)(b) does not categorically say that the supplies of goods and services should be for authorized operations, it is implicit therein when it says that the supplies are for the SEZ Developer or SEZ Unit. Therefore the litmus test for any supply to be termed as zero-
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
es by the applicant, do not qualify as zero rated supply, as defined under Section 16 of the IGST Act 2017. – ADVANCE RULING NO. KAR/ADRG 13 of 2018 Dated:- 26-7-2018 – Sri. Harish Dharnia, Joint Commissioner of Central Tax, Member (Central Tax) And Dr. Ravi Prasad M.P. Joint Commissioner of Commercial Taxes Member (State Tax) For The Respondent : S. Vishnumurthy, CA RULING 1. M/s Coffee Day Global Limited, 23/2, 6th Floor, Vittal Mallya Road, Bangalore – 560 001, having GSTIN number 29AABCA5291P1Z3, have filed an application, on 18.01.2018, for advance ruling under Section 97 of CGST Act,2017, KGST Act, 2017 & IGST Act, 2017 read with rule 104 of CGST Rules 2017 & KGST Rules 2017, in form GST ARA-01. They also enclosed copy of challan for ₹ 5,000/- bearing CIN number SBIN18012900060485 dated 11.01.2018. 2. The Applicant is engaged in supply of non-alcoholic beverages to SEZ units using coffee vending machines and undertakes the following types of transactions: (a) The a
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e beverages consumed by employees as being used for authorized operations in SEZ & therefore it is possible to argue that such supplies are not zero rated supplies. However the provisions of the Act have the ability to silence the provisions contained in the rules to the extent they are inconsistent with the Act. Therefore, the supplies to the SEZ units are in the nature of zero rated supplies not withstanding that they are not used for authorized operations. Accordingly, the applicant is eligible to claim refund of the tax paid on inputs used for such supplies. The applicant also contends that they are entitled to make the said supplies under a bond or letter of undertaking as provided in Rule 89 of CGST Rules 2017. In view of the above, the applicant filed this instant application seeking advance ruling on the following issue : Whether supply of non-alcoholic beverages to SEZ units using coffee vending machines is in the nature of zero rated supply as defined under Section 16 of
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ncluding beverages and ingredients for beverages, if literal interpretation is applies. (e) SEZ obtains separate registration as an independent vertical of a person and suppliers to SEZ mention such GSTIN. Accordingly invoices will show SEZ as the recipient. Thus no further proof is required to show that it is a supply made to SEZ. (f) Once the supplies are zero rated, refund of input tax credit of IGST paid on such supplies is automatic. The conditions such as they should be authorized operations etc can be treated as ultravires the statue. FINDINGS & DISCUSSION: 5. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by Sri S Vishnumurthy, Chartered Accountant during the personal hearing. We also considered the issue/transaction(s) involved on which advance ruling is sought by the applicant, relevant facts & the applicant's interpretation of law. 6. The Applicant seeks advance ruling on the questi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ut in the Special Economic Zone and also in the Units located therein have to be in accordance with the authorisation to be given by the Central Government, in terms of Section 4(2) of the SEZ Act, 2005. Further Section 15(9) of the said Act further requires that the SEZ Unit shall carry out only the authorised operations in the Unit. These provisions are incorporated in the definition of 'authorised operations'under Section 2(c) of the SEZ Act, 2005. 7.4 The definition of the authorised operations and the provisions of Section 4(2) and Section 15(9) clearly establish that the Units operating in the SEZ are required to undertake well defined activities. Such activities are termed as authorised operations. The Act also provides that the proper officer shall certify the authorised activities. It thus flows that any special benefit accruing to the Units located in the SEZ shall be strictly in respect of the authorised operations only. 8. In the backdrop of the various definitions
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
y supply'would cover everything, including beverages and ingredients for beverages. 8.3 The applicant has used the term 'any supply'. We find that this term is not used anywhere in the statute. The word 'any'has been used only once in Section 16(1) of IGST Act, 2017. It reads '(1) zero-rated supply means any of the following supplies of goods or services or both, namely:- …'. This sentence is followed by two options (a) and (b) and there is an 'or'between them. The word 'any'refers to either (a) or (b). Had the word 'any'been placed at the beginning of the sentence in (b) to read 'any supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone Unit'then the contention of the applicant would have been worth consideration. The statute has not used this word in (b). Therefore the interpretation of the applicant is not correct. 8.4 In this regard we once again refer to the provisions
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
mount.-(1) Any person, except the persons covered under notification issued under section 55, claiming refund of any tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax paid on goods exported out of India, may file an application electronically in FORM GST RFD-01through the common portal, either directly or through a Facilitation Centre notified by the Commissioner: Provided that any claim for refund relating to balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49 may be made through the return furnished for the relevant tax period in FORM GSTR-3 or FORM GSTR-4 or FORM GSTR-7, as the case may be: Provided further that in respect of supplies to a Special Economic Zone unit or a Special Economic Zone developer, the application for refund shall be filed by the – (a) supplier of goods after such goods have been admitted in full in the Special Economic Zone for authorised operations, as endorse
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =