Circular No. 48/22/2018-GST
F. No. CBEC/20/16/03/2017-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
New Delhi, Dated the 14
th
June, 2018
To,
The Principal Chief Commissioners/ Chief Commissioners/Principal Commissioners/
Commissioners of Central Tax (All)/
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarifications of certain issues under GST– regarding
Representations have been received seeking clarification on certain issues under the
GST laws. The same have been examined and the clarifications on the same are as below:
Sl.
No.
Issue Clarification
1. Whether services of short-term
accommodation, conferencing,
banqueting etc. provided to a Special
Economic Zone (SEZ) developer or a
SEZ unit should be treated as an inter-
State supply (under section 7(5)(b) of
the IGST Act, 2017) or an intra-State
supply (under section 12(3)(c) of the
IGST Act, 2017)?
1.1 As per section 7(5) (b) of the Integrated
Goods and Services Tax Act, 2017 (IGST
Act in short), the supply of goods or
services or both to a SEZ developer or a
SEZ unit shall be treated to be a supply
of goods or services or both in the course
of inter-State trade or commerce.
Whereas, as per section 12(3)(c) of the
IGST Act, the place of supply of services
by way of accommodation in any
immovable property for organising any
functions shall be the location at which
the immovable property is located. Thus,
in such cases, if the location of the
supplier and the place of supply is in the
same State/ Union territory, it would be
treated as an intra-State supply.
1.2 It is an established principle of
interpretation of statutes that in case of an
apparent conflict between two provisions,
the specific provision shall prevail over
the general provision.
1.3 In the instant case, section 7(5)(b) of the
IGST Act is a specific provision relating
to supplies of goods or services or both
made to a SEZ developer or a SEZ unit,
which states that such supplies shall be
treated as inter-State supplies.
1.4 It is therefore, clarified that services of
short term accommodation, conferencing,
banqueting etc., provided to a SEZ
developer or a SEZ unit shall be treated
as an inter-State supply.
2. Whether the benefit of zero rated
supply can be allowed to all
procurements by a SEZ developer or a
SEZ unit such as event management
services, hotel and accommodation
services, consumables etc?
2.1 As per section 16(1) of the IGST Act,
“zero rated supplies” means supplies of
goods or services or both to a SEZ
developer or a SEZ unit. Whereas,
section 16(3) of the IGST Act provides
for refund to a registered person making
zero rated supplies under bond/LUT or
on payment of integrated tax, subject to
such conditions, safeguards and
procedure as may be prescribed. Further,
as per the second proviso to rule 89(1) of
the Central Goods and Services Tax
Rules, 2017 (CGST Rules in short), in
respect of supplies to a SEZ developer or
a SEZ unit, the application for refund
shall be filed by the:
(a) supplier of goods after such
goods have been admitted in full in
the SEZ for authorised operations,
as endorsed by the specified officer
of the Zone;
(b) supplier of services along
with such evidences regarding
receipt of services for authorised
operations as endorsed by the
specified officer of the Zone.
2.2 A conjoint reading of the above legal
provisions reveals that the supplies to a
SEZ developer or a SEZ unit shall be
zero rated and the supplier shall be
eligible for refund of unutilized input tax
credit or integrated tax paid, as the case
may be, only if such supplies have been
received by the SEZ developer or SEZ
unit for authorized operations. An
endorsement to this effect shall have to
be issued by the specified officer of the
Zone.
2.3 Therefore, subject to the provisions of
section 17(5) of the CGST Act, if event
management services, hotel,
accommodation services, consumables
etc. are received by a SEZ developer or a
SEZ unit for authorised operations, as
endorsed by the specified officer of the
Zone, the benefit of zero rated supply
shall be available in such cases to the
supplier.
3. Whether independent fabric
processors (job workers) in the textile
sector supplying job work services are
eligible for refund of unutilized input
tax credit on account of inverted duty
structure under section 54(3) of the
CGST Act, 2017, even if the goods
(fabrics) supplied are covered under
notification No. 5/2017-Central Tax
(Rate) dated 28.06.2017?
3.1 Notification No. 5/2017-Central Tax
(Rate) dated 28.06.2017 specifies the goods
in respect of which refund of unutilized input
tax credit (ITC) on account of inverted duty
structure under section 54(3) of the CGST
Act shall not be allowed where the credit has
accumulated on account of rate of tax on
inputs being higher than the rate of tax on
output supplies of such goods. However, in
case of fabric processors, the output supply is
the supply of job work services and not of
goods (fabrics).
3.2 Hence, it is clarified that the fabric
processors shall be eligible for refund of
unutilized ITC on account of inverted duty
structure under section 54(3) of the CGST
Act even if the goods (fabrics) supplied to
them are covered under notification No.
5/2017-Central Tax (Rate) dated 28.06.2017.
2. It is requested that suitable trade notices may be issued to publicize the contents of
this Circular.
3. Difficulty if any, in the implementation of this Circular may be brought to the notice
of the Board. Hindi version will follow.
(Upender Gupta)
Commissioner (GST)
