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Trade Circular. No. 8T of 2013, dated 29.11.2013
Sub: Applicability of set-off to developers of SEZ and units in Special Economic Zone
Ref: 1. Resolution No. SEZ-2010/CR-5341IND-2 Industries, Energy & labour Department Mantralaya, Mumbai -40003,dt. 15th October, 2011.
2. Notification No. VAT-1512/CR 115/Taxation-1, dt 16th May 2013 w.e.f. 15.10.2011.
Developers of SEZ are engaged in construction and development of processing and non-processing zones and providing other utilities in SEZ. Also, units in SEZ may undertake construction or development activity. Such infrastructure development and construction in SEZ area may result in immoveable property on which no set-off was admissible as per provisions of set-off under rule 53(6), rule 54(g) and rule 54(h). To provide impetus to SEZs, the Government of Maharashtra Resolution No SEZ-2010/CR-534/IND-2 Mantralaya, Mumbai -400032 is issued on 15th October 2011. It is provided that the Developers of Special Economic Zones and units in Special Economic Zones will be eligible for refund of Value Added Tax paid on purchases in respect of processing area of Special Economic Zone.
To give the effect of the above GR a new rule 55B was introduced in MVAT Rules, 2005 with effect from 15th October 2011. As a result of new rule 55B, the developers of Special Economic Zone and units in processing area of Special Economic Zone will now be entitled to set-off with effect from 15th October, 2011 in respect of their purchases, on which the set-off was otherwise not available as per the provisions of rule 54(g), 54(h) and rule 53(6).
The new rule 55B reads as follows:
55B ; Applicability of set-off to developers and units in Special economic Zones
Nothing contained in sub-rule (6) of rule 53, or as the case may be, clauses (g) and (h) of rule 54 shall be applicable to the developers and units, in processing area of the Special Economic Zone.
Explanation : For the purposes of this rule ‘processing area’ shall mean the processing area is demarcated under Section 6 of the Special Economic Zones Act, 2205 ( 28 of 2005) but excluding educational institutions, hospitals, hotels, residential or commercial complexes, leisure and entertainment facilities or any other facilities allowed for authorised operations, as may be notified by the State Government , under section 50 of the said Act, for their operations and maintenance.
In view of the rule 5513, it is clarified that,
1. The rule 5513 shall be applicable only to the developers and units in processing area of the Special Economic Zone. For the purposes of this rule “processing area” shall mean the processing area as demarcated under section 6 of the Special Economic Zones Act, 2005 (28 of 2005) but excluding educational institutions, hospitals, hotels, residential or commercial complexes, leisure and entertainment facilities or any other facilities allowed for authorized operations, as may be notified by the State Government, under section 50 of the said Act, for their operations and maintenance.
2. Co-developers are not covered by the scope of rule 5513 and therefore they will not be eligible to claim set-off as per provision of rule 55B.
You are requested to bring contents of this circular to the notice of the members of your association.
Commissioner of Sales Tax,
Maharashtra State, Mumbai.
Office of the Commissioner of Sales Tax 8th floor, Vikrikar Bhavan, azgaon, Mumbai 400010.