No GST on Bauxite Loading and Transport Services Provided to SEZ Unit

In re Advait Mining And Constructions LLP (GST AAR Odisha)

The Odisha Authority for Advance Ruling has clarified the Goods and Services Tax (GST) implications for Advait Mining And Constructions LLP, which provides logistics services to M/s Pioneer Aluminum Industries Limited, a Special Economic Zone (SEZ) unit in Andhra Pradesh. The services include loading and transporting bauxite from a mine in Odisha to a railway siding, as well as other related activities. The applicant sought clarification on whether these services are taxable, the applicable tax rate, and if they constitute an inter-state or intra-state supply.

The authority determined that since the recipient of the services is a unit located in an SEZ, the supply of services falls under the category of a “zero-rated supply” as defined by Section 16(1)(b) of the IGST Act, 2017. This classification applies because the services, which are related to cargo handling and are integral to the recipient’s authorized operation of manufacturing alumina, are provided to an SEZ unit. Consequently, the supply is considered an inter-state supply, but it is zero-rated, meaning GST is not charged on the invoice. The supplier may, however, claim a refund of any input tax credit.

FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, ODISHA

Subject: M/s Advait Mining and Constructions LLP (herein after referred to as the ‘Applicant’) having principal place of business at Khata No. 227, Plot No. 12945, Tikiri Main Road, Beside Canara Bank, Tikiri, Kashipur, Rayagada, Odisha-765015 bearing GSTIN 21ACBFA9490R1ZWhas filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 read with Rule 104 of the CGST Rules, 2017 and Section 97 of the OGST Act, 2017 read with Rule 104 of OGST Rules, 2017, in FORM GST ARA-01 discharging the fee of Rs. 5,000/- each under the CGST Act and the OGST Act.

1.0 The Applicant is a body corporate incorporated under the provisions of limited liability Partnership Act, 2008 and has sought advance ruling in respect of the following question:

Q.1 Whether Loading of bauxite at mines, transporting it from mines to railway siding, stacking at railway siding, Rack loading and other miscellaneous services provided to M/s Pioneer Aluminum Industries Limited (SEZ unit) by the applicant is a taxable service under GST Act?

Q.2 If such services are taxable under GST what shall be the rate of tax and such services shall be inter-state or intra state?

1.1 At the outset, we would like to make it clear that the provisions of both the CGST Act and the OGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the OGST Act.

2.0 The applicant furnishes some facts relevant to the stated activity :

> That M/s Advaita Mining and Construction LLP has received a work order from M/s Pioneer Aluminum Industries Limited (formerly known as Anrak Aluminum Ltd) having GSTIN-37AAGCA2333M1ZM which is located in SEZ Zone situated at APIIC industrial park, Village G. Koduru Mandal, Anakapalle District, Andhra Pradesh.

> That M/s Pioneer Aluminum Industries Limited is purchasing bauxites from Odisha Mining Corporation Ltd and for which they had placed a work order to the applicant for providing Logistics services including loading and unloading of the bauxite onto rakes from Kodingamali Bauxite mine to Kakiriguma Railway siding. The services are to be provided in the state of Odisha.

> That the scope of services as per the work order are as follows:

(a) Loading at Mines

(b) Transportation of Bauxite from Kodingamali Mines to Kakiriguma Railway Siding,

(c) Storage at Kakiriguma Railway Siding, Stacking and Rake Loading,

(d) Re-handling at Siding,

(e) Miscellaneous other activities such as water sprinkling at Mines, Road, Traffic Management, Manpower, Track 86 Rake Cleaning manpower, Tarpaulins for rakes, Lighting, DG, Barricades etc.

> That in the Work Order it is mentioned that GST shall not be applicable for the below mentioned services as the jurisdiction of the recipient of the services is in SEZ Zone.

> That the invoices to be raised to M/s Pioneer Aluminum Industries Limited, APIIC Industrial Park, G. Koduru Village, Makavarapalem Mandal, Vishakhapatnam Dist- Andhra Pradesh-531113.

> That as per the opinion of the applicant they are providing services in the domestic Tariff Area which is outside of the SEZ unit, therefore the services provided by them are liable to tax under GST Act.

3.0 Submission of jurisdictional tax authority on Advance Ruling Application  The Jurisdictional Tax Authority has not submitted their opinion on the questions raised by the Applicant.

4.0 Personal Hearing:

During personal Hearing, Sri Prakhyat Surapaneni, C.A Authorized Representative of the applicant appeared before the Advance Ruling Authority on 04.06.2025 and reiterated the above points. He also sought time to produce some relevant documents. The applicant submitted that M/s Pioneer Aluminum Industries Limited has informed that their unit is located in SEZ Zone and Authorized operations is “manufacture of Alumina”, “Setting up, operation 86 Maintenance of the unit”. In support they submitted copy of letter dated 31.07.2009 of Assistant Development Commissioner, Vishakhapatnam Special Economic Zone and subsequent letter issued regarding extension of validity of such approval of the Asst. Development Commissioner, Vishakhapatnam SEZ.

5.0 Discussion& findings

We have gone through the advance ruling application, question on which Advance Ruling has been sought and the applicant’s interpretation of law and/or facts, as the case may be, in respect of the question asked. We observe that, the issue before us is squarely covered under Section 97(2) of the CGST Act, 2017 and therefore we admit the application for consideration.

5.1 Applicant has entered a work order with M/s Pioneer Aluminum Industries Limited (formerly known as M/s Anrak Aluminum Limited) for providing logistics services from Kodingamali Bauxite Mines to Kakiriguma Railway Sidings including loading into rakes. The detail scope of the work as mentioned in the Work order are as follows:

• Loading at miners
• Transportation of Bauxite From Kodingamali Mines to Kakiriguma Railway Siding
• Storage at Kakirguma Railway Siding, Stacking & Rake Loading,
• Rehandling at Siding
• Miscellaneous other activities such as water sprinkling at mines, Traffic Management, Manpower, Track & Rake Cleaning manpower, Tarpaulins for rakes, lighting DG, Barricades etc.

and the payments terms is Rs 662.44 per MT.

Regarding the applicability of GST on the aforementioned work, the work order mentioned that as the scope of the work is under the jurisdiction of SEZ, GST shall not be applicable for the services rendered by the applicant.

The questions before us to decide is as under;

“Whether the Service provided to M/s. Pioneer Aluminum Industries Limited (SEZ Recipient located in Andhra Pradesh State) by Advaita Mining and Construction LLP (Located in the state of Odisha) is taxable under GST Act?”

5.2 The issue has been examined in details. It is observed that Applicant is registered under the GST Act bearing GSTIN-21ACBFA9490R1ZW. In the present case, the Applicant was awarded work order from M/s. Pioneer Aluminium Industries Limited (formerly known as Anrak Aluminium Ltd.) for supply of providing logistics services from Kodingamali Buxite Mines to Kakiriguma Railway Sidings including loading onto rakes and other ancillary services as mentioned in work order. As submitted by the Applicant, the service recipient M/s. Pioneer Aluminium Industries Limited (formerly known as Anrak Aluminium Ltd.) is a unit located in Special Economic Zones situated at APICC Industrial Park, Village G. Koduru Manal, Anakapalle District, Andhra Pradesh. The applicant has produced renewal of letter of approval issued to M/s. Pioneer Aluminium Industries Limited (formerly known as Anrak Aluminium Ltd.) for continued operation under SEZ Scheme wherein the validity of letter of approval No. 22/ SEZ-1/Anark/VSEZ/2009 dated 31.07.2009 issued to M/s. Pioneer Aluminium Industries Ltd. has been extended to 29.03.2028. Hence, we found that, the recipient of service in the subject case falls under the jurisdiction of Special Economic Zone. Before deciding the taxability of the service so provided by the applicant to M/s. Pioneer Aluminium Industries Limited, it is noteworthy to determine the nature of supply of service in the subject case. For this we refer to provision under Section (7) & (8) of the IGST Act, 2017, the extract of the relevant provisions are mentioned below:

Section 7. Inter-State supply. –

(1) Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in-

(a) two different States;

(b) two different Union territories; or

(c) a State and a Union territory,

shall be treated as a supply of goods in the course of inter-State trade or commerce.

(2) Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce.

(3) Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in-

(a) two different States;

(b) two different Union territories; or

(c) a State and a Union territory,

shall be treated as a supply of services in the course of inter-State trade or commerce.

(4) Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce.

(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.

Section 8. Intra-State supply. –

(1) Subject to the provisions of _section 1Q, supply of goods where the location of the supplier and the place of supply of goods are in the same State or same Union territory shall be treated as intra-State supply:

Provided that the following supply of goods shall not be treated as intra-State supply namely:-

(i) supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit;

(ii) goods imported into the territory of India till they cross the customs frontiers of India; or

(iii) supplies made to a tourist referred to in section 15.

(2) Subject to the provisions of section 12, supply of services where the location of the supplier and the place of supply of services are in the same State or same Union territory shall be treated as intra-State supply:

Provided that the intra-State supply of services shall not include supply of services to or by a Special Economic Zone developer or a Special Economic Zone unit. Explanation I.-For the purposes of this Act, where a person has, –

(i) an establishment in India and any other establishment outside India;

(ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or

(iii) an establishment in a State or Union territory and any other establishment ¹(*****] registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons.

Explanation 2. – A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory.

From the above provisions of law, we found, the supply of Goods or Service or both which is made to or by a Special Economic Zone developer or a Special Economic Zone unit shall be treated as supply of Goods or Service or both in the course of inter-state trade or commerce (inter-state supply).

5.3 Now, we discuss about the taxability of supply of Goods/ Service when it is supplied or proposed to be supplied to a Special Economic Zone developer or a Special Economic Zone. Section 16 of the IGST Act, 2017 reads as:

Section 16. Zero rated supply. –

(1) “zero rated supply” means any of the following supplies of goods or services or both, namely: –

(a) export of goods or services or both; or

(b) supply of goods or services or both -I[for authorized operations] to a Special Economic Zone developer or a Special Economic Zone unit.

(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.

²1(3) A registered person making zero rated supply shall be eligible to claim refund of unutilised input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder, subject to such conditions, safeguards and procedure as may be prescribed:

Provided that the registered person making zero rated supply of goods shall, in case of non- realisation of sale proceeds, be liable to deposit the refund so received under this sub-section along with the applicable interest under section 50 of the Central Goods and Services Tax Act within thirty days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999 (42 of 1999.) for receipt of foreign exchange remittances, in such manner as may be prescribed.

(4) The Government may, on the recommendation of the Council, and subject to such conditions, safeguards and procedures, by notification, specify-

(i) a class of persons who may make zero rated supply on payment of integrated tax and claim refund of the tax so paid ³[M accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder];

(ii) a class of goods or services ³lor both, on zero rated supply of which, the supplier may pay integrated tax and claim the refund of tax so paid, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder].]

³J(5) Notwithstanding anything contained in sub-sections (3) and (4), no refund of unutilised input tax credit on account of zero rated supply of goods or of integrated tax paid on account of zero rated supply of goods shall be allowed where such zero rated supply of goods are subjected to export duty.]

From the above provision of law, we found that, the supply of Goods or Service or both [for authorized operations] to a Special Economic Zone developer or a Special Economic Zone unit shall be treated as “Zero Rated Supply”.

5.4 Now the issue is to determine, whether the supply in questions which is proposed to be made to the Service Recipient (SEZ developer or a SEZ Zone Unit) is meant for carrying out Authorized Operation or not. We have verified the letter of approval (LOA) dated 31.07.2009 (extended from time to time) issued by 0/0- The Development Commissioner, Vishakhapatnam Special Economic Zone to M/s. Anrak Aluminium Ltd. (presently known as M/s. Pioneer Aluminum Industries Ltd.) for authorized operation of Setting up, Operation 86 Maintenance of the unit for manufacture of Alumina. The relevant extract of the LOA is as under:

From the detail scope of the work as mentioned in the Work order issued by M/s. Pioneer Aluminum Industries Ltd., it appears that, the Service proposed to be provided to the above a SEZ Unit will fall under Cargo Handling Service. As Bauxite forms integral part for manufacture of Aluminium and Ministry of Commerce vide letter F.No. D.12/ 19/2013-SEZ dated 02.01.2018 in Si. No. 8 of the Default List of Services approved by the Department of Commerce has permitted Cargo Handling Service as default authorized services meant for SEZ developer or a SEZ Zone Unit, the supply in questions should qualify the definition of Zero rated supply as per Section 16(1)(b) of IGST Act, 2017.

5.5 In view of the foregoing discussions, we are of the opinion that services provided by the applicant to M/s. Pioneer Aluminum Industries Ltd are zero rated supply as per Section 16(1)(b) of IGST Act, 2017 and all the terms and conditions under the zero rated supply will be applicable to the Applicant in respect of the supply in question. held accordingly.

6.0 In view of the above, we pass the following order:

RULING

Q.1 Whether Loading of bauxite at mines, transporting it from mines to railway siding, stacking at railway siding , Rack loading and other miscellaneous services provided to M/s Pioneer Aluminum Industries Limited (SEZ unit) by the applicant is a taxable service under GST Act?

Ans: The supply of above service to the SEZ unit (M/s. Pioneer Aluminum Industries Ltd) will be treated as Zero Rated Supply as per as per Section 16(1)(b) of IGST Act, 2017.

Q.2 If such services are taxable under GST what shall be the rate of tax and such services shall be inter-state or intra state?

Ans: The supplies of such services shall be inter-state supply and rate of tax of such service has already answered in Question No. 01.

6.0 The Applicant or jurisdictional officer, if aggrieved by the ruling, may appeal to the Odisha State Appellate Authority for advance ruling under Section 100 of the CGST/OGST Act, 2017 within 30 days from the date of receipt of the Advance Ruling.