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2020 (1) TMI 928 - HC - GSTLevy of IGST - Place of supply - Rate of GST - Petitioner is the SEZ unit - e-auction by the respondents - taking delivery in the State of auction - purchase and forthwith supply the sandalwood purchased by the petitioner - zero rated supply or not - inter-state or intra state supply? - case of petitioner is that petitioner is located in a notified Special Economic Zone. Purchase of goods by a dealer located beyond the territorial limits of State of Kerala comes as interstate purchase of goods - HELD THAT:- the acceptance of delivery of sandal wood logs at Government Forest Department, Marayoor, is not the conclusive circumstance for deciding the place of supply of goods in the present regime of GST. Mr. Kumar does not dispute the circumstance that the petitioner upon completion of other sale conditions receives the sandal wood logs at Marayoor Forest Department depot, and the acknowledgment of goods at Marayoor Forest Department Depot does not result in termination of movement of goods but results in further movement of goods at the hands of recipient to SEZ. So the final destination i.e. SEZ in the case on hand is the supply point. The actual place of supply by plain interpretation of Section 10(1) is within the SEZ in Madras, State of Tamilnadu, but not in State of Kerala. - Therefore, the contention of respondents 1 and 2 that supply of goods is completed at Marayoor Forest Department and subject sets is an intra state transaction is unsustainable. Rate of tax / GST - @18% or Zero rated supply - Held that:- Under the scheme of IGST supplies to SEZ unit and SEZ developer are treated at par with physical exports. The exporting units to compete with world market need raw materials without payment of taxes and duties. Either the denial of zero-rated tax benefit by respondents or calling upon the petitioner to pay 18% tax and claim refund is not in line with statutory scheme discussed above. Respondents 1 & 2 by calling upon petitioner to pay 18% IGST are acting contrary to the scheme under IGST. Misuse is one of the gray areas in implementation of zero-rated tax. Respondent No.3 has informed that if the supplier and recipient are situated in different States the transaction is treated IGST transaction. Intra-State movement of goods culminating delivery to the recipient in SEZ comes under IGST. To the same effect is supply of goods or services to a SEZ in any other State in India. The Act provides for safeguards against suppression or evasion of applicable tax. The subject supply comes as inter-State movement of goods to SEZ outside the State of Kerala. The first and second respondents though have proceeded to conduct e-auction by reference to applicable VAT, the same is understood as applicable taxes i.e., GST/IGST, and the transaction is concluded or completed by the parties with reference to the legal obligations under GST/IGST. The subject transaction shall be treated as zero-rated tax supply - petitioner is given four weeks from today to comply with the conditions which the petitioner is under obligation to comply with except deposit of 18% tax IGST and communicate to 1st and 2nd respondents with a request to deliver the goods - Petition disposed off.
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