EEZ under GST: Is “Other Territory” Being Overlooked?

The GST treatment of supplies made to a place located in India’s Exclusive Economic Zone (EEZ) has always sat in an uncomfortable grey area. Over the years, a largely accepted practice has evolved where such supplies are mapped to the nearest coastal State for GST registration and return filing purposes. While this approach may work operationally, it is worth asking whether it truly flows from the statute itself. A closer reading of the CGST Act suggests that the issue may deserve deeper scrutiny.

What Section 25 Actually Says 

The Explanation to section 25 of the CGST Act specifically deals with territorial waters. It clearly states that territorial waters shall be treated as part of the nearest coastal State for registration purposes. However, what is equally important is what the provision does not say.

There is no reference to the Exclusive Economic Zone. There is also no reference to the continental shelf. Given that Parliament was fully conscious of India’s maritime zones at the time GST was introduced, the omission is difficult to dismiss as accidental. If the intention was to extend the same treatment to EEZ, the law could have said so in clear terms.

EEZ Is Part of India, but Not of Any State 

There is no debate that the EEZ forms part of “India” for GST purposes. The statute itself recognizes this. But inclusion within India does not automatically mean inclusion within a State or Union Territory.

EEZ does not fall within the boundaries of any State. It is not notified as a Union Territory. It is also distinct from territorial waters, which enjoy full sovereignty. The EEZ is a special maritime zone where India has limited sovereign rights, primarily for economic exploitation.

This leaves EEZ in a unique legal position – inside India, yet outside the federal structure of States and Union Territories.

Re-examining the Meaning of “Other Territory”

The CGST Act defines “Other Territory” in very simple terms: any territory other than a State or Union Territory. On a plain reading, EEZ appears to fit this description quite neatly.

The idea that “Other Territory” is limited only to land-based territories is an assumption that is not explicitly supported by the statutory language. The law does not say “land territory”; it says “any territory”. From a textual perspective, EEZ satisfies this test.

Can Section 25 Be Used to Reject This View?

One common objection is that Section 25 does not provide for registration of EEZ as an Other Territory. However, Section 25 is a procedural provision. It explains how registration is to be obtained once the nature of the territory is identified. It does not, by itself, classify territories.

The Explanation to Section 25 extends only to territorial waters. It neither includes EEZ nor excludes it. Using this silence to force EEZ into a coastal State framework may stretch the provision beyond its intended scope.

Practice vs Principle

It is undeniable that GST systems today require selection of a State, and mapping EEZ to the nearest coastal State offers administrative convenience. But convenience has never been a substitute for statutory clarity.

GST jurisprudence has repeatedly shown that practices accepted for years can still fail when tested against the bare provisions of the law. EEZ may well be another area where the law and practice have quietly drifted apart.

A Case for Policy Rethinking

Viewing EEZ as “Other Territory” is not about disrupting compliance. It is about recognising the legal character of a zone that does not naturally belong to any State. Such recognition could, in fact, prompt clearer legislative or system-level solutions, such as dedicated GST codes for maritime zones.

Until then, the question remains open and worthy of discussion rather than dismissal.

Closing Thought

EEZ sits in a space that is legally Indian, but federally undefined. In the absence of an express deeming provision under Section 25, classifying EEZ under “Other Territory” is not an unreasonable proposition. It may not be the current practice, but it is certainly a viewpoint that deserves careful consideration in serious GST discourse.

Disclaimer: This article reflects a personal interpretational view intended for academic discussion and professional debate. It does not constitute legal advice or override prevailing administrative practice.