GST – GST FAQ 3rd Edition – December, 2018 – 21.4 – 21.4 Special Economic Zone (SEZ) Q 38. How are supplies by and to SEZs treated in GST? Ans. There is no change in the SEZ scheme. All imports by SEZs are exempted from any duty/tax. As per section 7(5)(b) of the IGST Act, 2017, a supply of goods or services or both to or by a SEZ developer or a SEZ unit is treated to be a supply of goods or services or both in the course of inter-State trade or commerce. Further as per section 16 of IGST Act, 2017 supply of goods or services or both to a SEZ developer or a SEZ unit is considered as zero rated supply. Q 39. What will be the IGST rates when goods or services or both are supplied to SEZ unit? Ans. Supplies to SEZ unit or developer are considered as zero rated. As such, the supplier can choose to either supply on payment of IGST and claim refund or supply without payment of IGST and in that scenario can only claim the refund of unutilized ITC, if any. The IGST rates when supplying goods
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SEZ unit shall be treated as an inter-State supply. Q 41. Whether SEZ unit or developer needs to pay IGST when it received supplies which are under reverse charge mechanism? Ans. All supplies to SEZs are zero rated. However, the suppliers are given two options. In this case, the supplier is not liable to pay GST as the supply is under reverse charge mechanism. The recipient is considered as deemed supplier. Therefore, SEZ has to pay GST in this case. Q 42. What is the refund mechanism when a DTA supplier supplies goods/services to SEZ Unit? Ans. The supplier to SEZs has following two options: (i) Supply goods or services or both to SEZ unit or developer on payment of Integrated tax and claim refund (ii) Supply goods or services or both to SEZ unit or developer without payment of Integrated tax under LUT/Bond and claim refund of unutilized ITC Option I: Supply goods or services or both to SEZ unit or developer on payment of Integrated tax and claim refund The supplier has to follow the
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rule (1) and the details of payment, along with the proof thereof, made by the recipient to the supplier for authorised operations as defined under the Special Economic Zone Act, 2005, in a case where the refund is on account of supply of services made to a Special Economic Zone unit or a Special Economic Zone developer; (iii) a declaration to the effect that the Special Economic Zone unit or the Special Economic Zone developer has not availed the input tax credit of the tax paid by the supplier of goods or services or both, in a case where the refund is on account of supply of goods or services made to a Special Economic Zone unit or a Special Economic Zone developer; (Section 89(1) of CGST (Rules), 2017.) Option II: Supply goods or services or both to SEZ unit or developer without payment of Integrated tax under LUT/Bond and claim refund of unutilized ITC The supplier has to follow the procedure outlined in rule 96A of the CGST Rules, 2017. He needs to submit a bond/LUT in FORM GST R
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Development Commissioner SEZ or the jurisdictional proper officer of GST? Ans. As per Circular No.2/2/2017-GST dated 04.07.2017 Bond/LUT shall be furnished to the jurisdictional Deputy/Assistant Commissioner having jurisdiction over the principal place of business of the exporter. Q 45. What are the requirement for submitting Bond/LUT? Ans. The requirement of Bond/LUT will be as prescribed under Circulars No. 4, 8 and 40/2017. The registered person (exporters) shall fill and submit FORM GST RFD-11 on the common portal. An LUT shall be deemed to be accepted as soon as an acknowledgement for the same, bearing the Application Reference Number (ARN), is generated online. No document needs to be physically submitted to the jurisdictional office for acceptance of LUT. If it is discovered that an exporter whose LUT has been so accepted, was ineligible to furnish an LUT in place of bond as per Notification No. 37/2017-Central Tax, then the exporter s LUT will be liable for rejection. In case
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-processing area of SEZ will not be eligible for exemption granted to SEZ. Q 49. Whether the exemption granted to nominated agency pre GST regime will continue in the post GST regime for importing gold? Ans. The bank as a nominated agency will continue to get the exemption of Customs duty as prevailed before the GST regime vide Notification No. 57/2000-Cus dated 08.05.2000. Import of gold by specified banks and specified PSUs as mentioned in Notification No. 77/2017-Cus dated 13.10.2017 attracts Nil IGST. However, other banks will have to pay the IGST as per the Notification No. 26/2017-Cus dated 28.06.2017 as no exemption has been granted for payment of IGST duty to these. Q 50. Can bank recover the IGST rate from the SEZ Unit while supplying gold to the SEZ Unit? Ans. No. The banks cannot recover IGST rate from the SEZ Unit. However, the Banks can claim the refund of the IGST paid on imports after supplying the goods to the SEZ Unit. Q 51. Whether services of short term accommodation
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cular No. 48/22/2018- GST dated 14th June, 2018) Q 52. Whether the benefit of zero rated supply can be allowed to all procurements by a SEZ developer or a SEZ unit such as event management services, hotel and accommodation services, consumables etc? Ans. Subject to the provisions of section 17(5) of the CGST Act, if event management services, hotel, accommodation services, consumables etc. are received by a SEZ developer or a SEZ unit for authorised operations, as endorsed by the specified officer of the Zone, the benefit of zero rated supply shall be available in such cases to the supplier. (CBIC Circular No. 48/22/2018- GST dated 14th June, 2018) Q 53. Whether a company having a unit in SEZ and a unit in DTA require separate registration for both the units? Ans. Yes, as per Section 8(1) of CGST (Registration) Rules, 2017 a person having a units(s) in a Special Economic Zone or being a Special Economic Zone developer shall make a separate application for registration as a business ver
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anyone making a supply to a SEZ unit or SEZ developer has to necessarily obtain GST registration. Q 55. Whether SEZ Act/Rules are aligned with the GST? Ans. SEZ Rules, 2006 have been synced with the GST Provisions vide SEZ (Amendment) Rules, 2018. The terms like Service Tax, Stamp Duty etc replaced with CGST/SGST/IGST/UTGST etc. GST registration certificate required instead of Sales tax registration earlier for establishment / setting up of SEZ unit(s) Q 56. Whether duty drawback is admissible on supplies by DTA units to SEZs? Ans. Yes. Supplies made by DTA unit to SEZ Unit or developer are eligible for drawback in cases where the SEZ Unit or developer issues a disclaimer to the DTA supplier and drawback is claimed by the DTA supplier. Drawback shall be processed and paid by the office of Principal Commissioner or Commissioner of Customs/ Customs (Preventive) in whose jurisdiction the DTA Unit falls. Brand rate fixation also to be done by the office of Principal Commissioner/ Commissio
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