Order Date – 21 November 2023

Parties: Maithan Alloys Limited Vs Union of India

Facts –

• The Petitioner, Maithan Alloys Limited, have established SEZ units and conducting authorized operations. They claim exemptions on payment of tax, duty and cess payable on goods and services imported to SEZ units under the provisions of the SEZ Act. Among the exemptions claimed, one is in respect of cess payable under the GST compensation Act for import of coal from foreign countries.

Issue –

• Whether the petitioners being SEZ units are exempted from payment of GST compensation cess?

Order –

• The Divisional Bench of Hon’ble High Court observed that the SEZ Act is a self-contained Act whereunder exemptions on taxes, duties, cess, drawbacks and concessions are provided on imports and exports of the goods and on supply of services to the Developers and SEZ units. Therefore the exemptions etc., have to be looked into from the provisions of the said Act and not from elsewhere.
• When Section 26 of SEZ Act is perused, it is discernible that the word “duty” alone is used in the said section but not the word “cess”. More prominently U/s 26(1)(a), on which much reliance is placed by the petitioners, what is exempted is only duty of customs but not any cess much-less the GST Compensation Cess.
• Therefore, a conjunctive study of Section 26(1)(a), 2(zd) of SEZ Act, 2005 and Section 2(15) of Customs Act, 1962 would pellucidly tell that the phrase ‘duty of customs’ used in Section 26(1)(a) of SEZ Act only refers to duty leviable under Customs Act, 1962 but the said phrase does not include cess under GST Compensation Act.
• Accordingly the writ petitions are dismissed.