Order date - 13 January 2023

Facts - 

• The Appellant, M/s. Portescap India Private Limited, are inter alia engaged in manufacturing of customized motors in India. As the Appellant is an SEZ Unit, it is engaged in exports of the manufactured goods outside India.
• The Appellant procures Rental Services from "Santacruz Electronics Export Processing Zone" (hereinafter referred to as "SEEPZ") SEZ Authority, situated at SEEPZ Mumbai, which is a Local authority having GSTIN 27AAALS4995GIZH. Additionally, other services like Advocate Services and Gate Pass Services from SEEPZ are being procured wherein GST is presently being discharged by the Appellant under the Reverse Charge Mechanism.
• As per the Notification No. 18/2017- Integrated Tax (Rate) dated 05.07.2017, the Central Government exempts services imported by a unit or a developer in the Special Economic Zone for authorized operations, from the whole of the integrated tax leviable thereon under section 5 of the Integrated Goods and Service Tax Act, 2017.
• Maharashtra Advance Ruling Authority, wherein it has been held that the Appellant are liable to pay IGST on the impugned services, i.e., services of renting of immovable property, under RCM.

Issue -

• Whether an SEZ unit is required to pay tax under reverse charge mechanism?

Order –

• The authorities observed that as the supply is being made to SEZ developer or SEZ unit for carrying out the authorised operation in SEZ, the same will be treated as zero-rated supply, and will not be subject to GST. Therefore, it will not matter in the present case that the impugned services of renting of immovable property is being provided by the SEZ developer, i.e. SEEPZ SEZ to the Appellant, and not by a supplier located in DTA.
• From provisions of section 16 (1) and section 5 (3) of IGST Act, it is clear that the intention of the legislature is not to tax the supplies made to a unit in SEZ or a SEZ developer, which has been made zero rated under clause (b) of section 16 (l) of the 1GST Act, 2017. 
• The Appellant are not required to pay GST under RCM on any other services received from the suppliers located in DTA for carrying out the authorized operation in SEZ subject to furnishing of LUT or bond as a deemed supplier of such services.