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2018 (8) TMI 875 - AAR - GSTSupplies to SEZ - non-alcoholic beverages - input tax credits relating to SEZ supplies - Whether supply of non-alcoholic beverages to SEZ units using coffee vending machines is in the nature of zero rated supply as defined under Section 16 of the IGST Act 2017? - Held that:- Each SEZ Unit is allowed to carry out predefined activities (termed as 'authorised operations') to be eligible to avail the benefits of being in the Special Zone. The activities to be carried out have, therefore, to be strictly in consonance with the authorized operations certified by the proper office of the SEZ. Though the IGST Act, in Section 16(1)(b) does not categorically say that the supplies of goods and services should be for authorized operations, it is implicit therein when it says that the supplies are for the SEZ Developer or SEZ Unit. Therefore the litmus test for any supply to be termed as zero-rated supply is to ascertain essentially whether it is for authorized operations or not. The sine qua non or indispensible element is that the supply has to be certified by the proper officer as constituting authorized operations. Benefit flowing out from the SEZ Act, 2005, accrues to anyone only when the condition of authorized operations is fulfilled. Therefore even in the event of the IGST Act, 2017, not explicitly using the term 'authorised operations' in Section 16(1)(b), it is implicit that the supply of goods or services or both described in Section 16(1)(b) have to be read as in relation to authorized operations - The applicant has not made out a case that the activity undertaken by them is certified as an authorized operation by the proper officer of the SEZ. The activity undertaken by the applicant does not qualify to be a zero-rated supply. Ruling:- The supply of non-alcoholic beverages/ingredients to such beverages, to SEZ units using coffee vending machines by the applicant, do not qualify as zero rated supply, as defined under Section 16 of the IGST Act 2017.
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