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2019 (3) TMI 1011 - AAAR - GSTLevy of GST - Supply of services to SEZ - supply of services by way of providing accommodation services, supplying food and beverages and supplying services ancillary to providing accommodation services - zero rated supply or not - Section 16 of the IGST Act, 2017 - Accommodation services to a visitor other than a visitor located in SEZ - Held that:- It is evident that clause (b) of sub-section (1) of Section 16 of the IGST Act, 2018 provides that supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit, is covered under ‘zero rated supply’. Thus, to be qualified as ‘zero rated’ supply, the law specifically refers the supply ‘to’ SEZ developer/unit and not ‘to or by’ SEZ developer / unit. Therefore, the supply of service by the appellant would be liable to Goods and Services Tax, unless specifically exempted by law. There is no doubt that supplies made by units or developers / co-developers of SEZ are treated as inter-state supply under Section 7(5) of the IGST Act, 2017 and are liable to IGST under Section 5(1) of the IGST Act, 2017. Out of these, only supplies made to SEZ developer / unit for authorized operations have been made zero rated, other are liable to IGST. The sub-section (1) of Section 53 of the SEZ Act, 2005 provides a deeming fiction whereby the Special Economic Zone shall be deemed to be a territory outside the customs territory of India and that too for the specific purposes of undertaking the authorized operations. The term “customs territory” cannot be equated to the territory of India. Further, the interpretation advanced by the appellant would lead to a situation where a Special Economic Zone would not be subject to any laws of India whatsoever. The entire SEZ Act, 2005 would be rendered redundant since it is stated to extend to the whole of India. Section 51 of the SEZ Act, 2005 provides for overriding effect in case there is anything inconsistent contained in any other law. However, no inconsistency between the provisions of the SEZ Act, 2005 and IGST Act, 2017 or CGST Act, 2017 / GGST Act, 2017 has been pointed out by the appellant - the reliance placed by the appellant on Section 53 and 51 of the SEZ Act, 2005 in support of contention that their activity in SEZ is not liable to IGST, is not acceptable. Section 53(2) of the SEZ Act, 2005 creates a deeming fiction whereby a SEZ is deemed to be a port, airport, inland container depot, land station and customs stations under section 7 of the Customs Act, 1962. On the other hand, Circular Nos. 46/2017-Cus dated 24.11.2017 and 3/1/2018-IGST dated 25.05.2018 clarified applicability of IGST / GST on goods transferred / sold while being deposited in a warehouse registered under section 57 or 58 or 58A of the Customs Act, 1962 (customs bonded warehouse), without payment of duty. The purpose of appointing any port, airport etc. under Section 7 of the Customs Act, 1962 is quite different than the purpose of licensing any warehouse under Section 57, 58 or 58A of the Customs Act, 1962. Therefore, the clarification issued for customs bonded warehouse are not applicable to the appellant even if a SEZ is deemed to be a port etc. under Section 7 of the Customs Act, 1962. Application disposed off.
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