The Finance Act of 2021 introduced a significant amendment concerning supplies made to Special Economic Zones (SEZ) units and SEZ developers. This amendment, which becomes effective on October 1, 2023, has substantial implications for businesses involved in such transactions. In this article, we will delve into the details of this amendment, exploring the conditions for zero-rated supply, the importance of endorsements, and the authorized operations specified under the SEZ Act of 2005.
Provision related to the Supply made to SEZ units / SEZ developer has been amended by Finance act 2021 and same is effective from 01.10.2023.
As per the amendment, supply of Goods / Service made to the SEZ units / developers will be considered as ZERO rated supply (No GST), only if, same are received for the authorized operation of Unit.
List of Inputs and Input services, which shall be considered for the authorized operation, is specified under SEZ Act 2005 and rules made thereunder.
Therefore, for suppliers one need to take precaution for supply made to SEZ units / SEZ Developer is to check whether the same is for authorized operation, and more important is to take the endorsement by Commissioner / Appropriate authority from SEZ unit/ developers.
SEZ Commissioner / appropriate authority gives the endorsement in following two mode
1) Physical.
2) Online.
Physical Mode:- here the stamp mentioning the Goods / Services are received for the authorized operation is mentioned along with seal & Signature Authority is mentioned on the invoice itself and this original endorsement is provided to the supplier.
Online mode:- Here, SEZ units file a form known as “SEZ-DTA Procurement form” filed with SEZ authority and after due verification, a certificate is issued by the authority. It is important to note that, since certificate is issued, invoice details of the supplier are necessary on the certificate e g Invoice No and Date, supplier GSTN, value of supply etc.
This endorsement (physical or online) is very much important for making supply without levy of GST and also for claiming refund under GST.
As per F.No. D.12/19/2013-SEZ dated 02/01/2018 issued by Ministry of Commerce & Industry Department of Commerce (SEZ Section) issued list of default Authorized operations of SEZ units, same are as below,
Default List of Services approved by Department of Commerce
1. Airport Authority Services
2. Architect Services
3. Asset Management Services
4. Advertising agency services
5. Airport services
6. Banking and other financial services
7. Business Exhibition services
8. Cargo Handling services
9. Chartered Accountant Services
10. Cleaning Activity services
11. Clearing & forwarding agents services
12. Commercial or industrial construction services
13. Company secretary services
14. Computer network services
15. Consulting Engineer’s services
16. Cost accountant services
17. Courier services
18. Credit rating agency services
19. Custom house agent services
20. Commercial training & coaching services
21. Convention services
22. Copyright services
23. Design services
24. Development & supply of content services
25. Erection, commission and installation services
26. General insurance business services
27. Goods transport agency services
28. Information Technology Software Services
29. Interior decorator services
30. Internet communication services
31. Intellectual property services
32. Legal consultancy services
33. Management, maintenance or repair services
34. Manpower Recruitment and supply agency services
35. Market research agency services
36. Other Port services
37. Outdoor caterer services
38. Packaging activity services
39. Port services
40. Processing & clearing house services
41. Renting of Immovable property services
42. Security agency services
43. Site formation & clearance, excavation earth moving
44. Storage & warehousing services
45. Supply of tangible goods
46. Survey & map making services
47. Scientific or technical consultancy service
48. Sound recording studio or agency services
49. Technical inspection and certification
50. Technical Testing and Analysis services
51. Telecommunication services
52. Transport of goods by Air services
53. Transport of goods by Rail services
54. Transport of goods by Road services
55. Works contract services
56. Transport of goods services
57. Construction Services
58. On-line Information and database access services
59. Rent-a-cab Scheme Operator’s Services
60. SEZ Online Services
61. Air Travel Agent Services
62. Rail Travel Agent’s Services
63. Travel Agent’s Services
64. Business Support Service
65. Transport Passengers by Air
66. Accommodation service
However it is advisable to check the latest list for better compliance and avoid penal consequences.
Also Read: GST Zero Rating Benefit eligible on Employee Welfare Facilities in SEZs
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