GST Imlication on warehousing services in SEZ units, Goods and Services Tax - GST

[JAY SHAH]

Dear Sirs

We are SEZ units and having warehouse in SEZ Area. we have store the cargo of one of our client who is outside india. This cargo is imported into india and will be handed over to CHA. Invoicing and receipt of the same are in foreign currency. is warehousing service taxable or to be considered as a export/zero rated?

Posts / Replies

[KASTURI SETHI]

Exemption to goods imported by unit/developer in Special Economic Zone (SEZ) for authorised operations

In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts all goods imported by a unit or a developer in the Special Economic Zone for authorised operations, from the whole of the integrated tax leviable thereon under sub-section (7) of section 3 of the Customs Tariff Act, 1975 (51 of 1975) read with section 5 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017).

[Notification No. 64/2017-Cus., dated 5-7-2017]

[JAY SHAH]

Thanks for prompt reply

We are SEZ units but we have not imported goods. we are providing just warehousing services to importers.

[Nitika Aggarwal]

Can you please clarify the location of importers to whom you are supplying warehousing services ?

[JAY SHAH]

This time importer is in gujarat.

Morever this time warehousing charges will be paid by exporter who is outsie india. Invoice will be made in $. And will recived the sane.

What is implication of gst in both case. If paid by importer in india or paid by exporter who are outside india. Kindly note We are SEZ units.

[Nitika Aggarwal]

Dear Sir,

As per the facts briefed to us, the warehousing services provided by SEZ units to the importers located in India are exigible to tax in terms of section 7(5)(b) of IGST Act, 2017.

Relevant extract of the same is reproduced as under:-

"(5) Supply of goods or services or both,––

(a) when the supplier is located in India and the place of supply is outside India;

(b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or

(c) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section,

shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce."

Further, the amount of consideration received either in foreign currency or INR, this will not make any difference to the taxability of aforesaid transaction.

Hope this will resolve your Query.

Regards

Nitika Aggarwal

9953157961

[JAY SHAH]

thanks

but in the same case, what are the implication if payment made by exporter who are outside india?

[Hem Salgaokar]

SEZ unit work with foreign party so thats treated as a export.

[Nitika Aggarwal]

Sir,

What matters in the transaction is to whom the services has been provided. As per the facts briefed, since services has been provided to the person located in India i.e. Importer, This means

Location of supplier is in India

Location of recipient is in India

Place of supply of aforesaid services is in India.

Thus, the aforesaid transaction is taxable in accordance with the provisions of IGST Act, 2017.

So far as transaction is taxable, receiving of consideration either in INR or foreign exchange is immaterial and inconsequential. In any case it shall not be treated as export, as for the purpose of export, it conditions needs to be satisfied, which is not satisfied in your case.

Regards

Nitika Aggarwal

9953157961

[YAGAY and SUN]

Simply put you are a SEZ Unit who is providing services to a Unit in DTA. Hence taxable under the provisions of SEZ Act read with the GST provisions.

[KASTURI SETHI]

For additional knowledge. Also read circular no.3/1/18 - IGST dated 25.5.18.