Question
One foreign company has placed the order for certain goods to the registered person of Gujarat State and instructed to deliver the goods directly to SEZ unit situated in the State of Gujarat. Payment would be done by foreign company in foreign currency. Whether the Gujarat Person would be liable to pay the GST? Whether supply by the Gujarat Person Would be regarded as the supply to SEZ ?

Answer

Facts of the case:
Registered person of Gujarat has received an order from Foreign Company to deliver goods to SEZ in Gujarat.

Law Applicable:
SECTION 2 of IGST Act
(5) 'export of goods' with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India;


SECTION 16 of IGST Act

(1) 'zero rated supply' means any of the following supplies of goods or services or both, namely:''

(a) export of goods or services or both; or

(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.


Interpretation:
In this case as the goods are supplied to SEZ in India and are not taken to a place outside India, hence cannot be treated as export of goods as per section 2(6) of IGST Act.

As per Section 16 export to other country as well as supply to SEZ both are covered under the definition of Zero Rated Supply. Therefore it will be treated as zero rated supply.

It is to be noted that although export and supplies to SEZ are treated equally in GST but the information is shown separately because the supplies to SEZ are not mentioned in Custom Ports.

Conclusion:
As supply to SEZ is treated as Zero rated supply hence goods can be supplied to SEZ on payment of IGST or under LUT.

(Reply dt.10/07/2019)