I have a query on billing to SEZ's. There are three trnsactin parties 1) SEZ who is the customer 2) Supplier ot SEZ and 3) sub-contractor for the supplier [vendor]. Material is manufactured at the vendors place and shipped directly to the SEZ customer place and billed to Supplier [party no.2]. ARE - I form is colelcted by the vendor from the SEZ customer. Excise is exempted and sales tax is charged as Nil.
The commerical transaction is between party no 1 and 2 and between 2 and 3. For the transaction between 2 & 3 VAT is not charges as the material is supplied to SEZ and hence exempt from tax.
Also transaction between 1&2 - 2 does not charge any tax as the material is sent to SEZ and hence nil tax charged.
Clarification required - whether the transaction between 2/3 - whether 3 should charge VAT / CST as applicable and VAT paid by 2 can be taken as input credit.
CAclubindia
