Court :
Gujarat, AAR
Brief :
The Gujarat, AAR in the matter of M/s. Waaree Energies Limited [Advance Ruling No. GUJ/GAAE/R/2024/09 dated April 16, 2024] held that the Special Economic Zone units ("SEZ unit") are not required to pay GST under Reverse Charge Mechanism ("RCM") on any service received from suppliers located in the Domestic Traffic Area ("DTA") for carrying out the authorized operation in the SEZ unit, provided that a Letter of Undertaking ("LUT") or bond as a deemed supplier of such services is furnished as mentioned in Notification 37/2017-Central Tax dated October 04, 2017.
Citation :
Advance Ruling No. GUJ/GAAE/R/2024/09 dated April 16, 2024
The Gujarat, AAR in the matter of M/s. Waaree Energies Limited [Advance Ruling No. GUJ/GAAE/R/2024/09 dated April 16, 2024] held that the Special Economic Zone units ("SEZ unit") are not required to pay GST under Reverse Charge Mechanism ("RCM") on any service received from suppliers located in the Domestic Traffic Area ("DTA") for carrying out the authorized operation in the SEZ unit, provided that a Letter of Undertaking ("LUT") or bond as a deemed supplier of such services is furnished as mentioned in Notification 37/2017-Central Tax dated October 04, 2017.
M/s. Waaree Energies Limited ("the Applicant") were engaged in the manufacture of solar modules and were registered under the category of the taxpayer as a SEZ Unit. The Applicant availed services such as Goods Transport Agency ("GTA"), Legal services from Advocate, Security Services, and Bus Hiring for employees (specified services) from the DTA for their SEZ Unit.
In respect of the four services they avail, the Applicant is required to pay GST under RCM in terms of Notification No. 10/2017-Integrated Tax (Rate) dated June 28, 2017.
The Applicant contended that Rule 5(5)(a) of the Special Economic Zone Rules, 2006 ("the SEZ Rules"), provides an exemption from the State Goods and Services Tax ("SGST"). Further, Rule 30(1) of SEZ Rules, enables a DTA supplier to clear services to an SEZ unit as in the case of a zero-rated supply in terms of Section 16 of the Integrated Goods and Services Tax Act, 2017 ("the IGST Act"), either under the bond or under legal undertaking or under any other refund procedure permitted under the GST law. Therefore, the aforesaid Notification cannot have any application in the case at hand.
Hence, aggrieved by the circumstances, the Applicant approached the Advance Ruling Authority.
Whether SEZ units furnishing LUT are not required to pay GST on RCM for services availed from the DTA supplier?
Held:
The Gujarat, AAR in Advance Ruling No. GUJ/GAAE/R/2024/09 held as under:
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