1. Whether GST is to be paid on RCM by SEZ unit on receipt of services mentioned u/s 5(3) of IGST Act?
2. Can SEZ unit shall raise tax invoice indicating customs duty, IGST on sale made to DTA unit and collect from DTA unit or DTA unit to pay on RCM basis for IGST and customs duty on their own?
3. Is SEZ unit entitled to take ITC where supplier in addition to exercising option of paying IGST and claiming refund from Dept also recovering it from SEZ units? (unjust enrichment applicable). Is SEZ entitled to take credit on the basis that all four conditions specified u/s 16 of CGST Act getting satisfied?
Also kindly quote jurisdiction/applicability of ruling (case laws if any) for above queries.
07 July 2024
Navigating the GST implications for Special Economic Zones (SEZs) involves specific provisions under the GST law. Here are the clarifications based on your queries:
1. **GST on RCM by SEZ on Services under Section 5(3) of IGST Act**: - Yes, SEZ units are required to pay GST under Reverse Charge Mechanism (RCM) on services received from non-SEZ entities under Section 5(3) of the IGST Act. This includes services like legal, accounting, and other specified services. SEZ units need to self-assess and pay IGST on such services directly to the government.
2. **Tax Invoice and Collection on Sale to DTA (Domestic Tariff Area) Units**: - SEZ units can raise tax invoices indicating IGST on sales made to DTA units. The DTA unit is then liable to pay IGST under RCM for these supplies. The SEZ unit should correctly charge IGST on such transactions and ensure compliance with the invoicing and payment requirements.
3. **Input Tax Credit (ITC) Entitlement for SEZ Units**: - SEZ units are eligible to claim ITC on goods and services used for furtherance of business, including those where IGST is paid and then recovered from the SEZ unit (subject to the conditions under Section 16 of the CGST Act). This includes situations where the supplier pays IGST and claims a refund, but recovers it from the SEZ unit. The SEZ unit can take credit provided it meets all statutory conditions for claiming ITC.
**Jurisdiction/Applicability**: - For specific case laws or rulings, it's advisable to refer to GST Council notifications, CBIC circulars, and relevant GST rulings. However, for detailed legal interpretations and specific case laws, consulting a GST expert or legal advisor familiar with SEZ provisions under GST would be beneficial. They can provide insights into recent rulings or clarifications issued by the GST authorities.
For further clarity and compliance, especially regarding complex scenarios involving SEZ units and GST, consulting with a GST practitioner or legal expert would ensure accurate interpretation and adherence to GST regulations.
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