CHATROOM: 'CBIC should tweak legal provisions for SEZ to DTA sales'

The removal of goods from SEZ to DTA is done on the basis of B/E filed with SEZ Customs on payment of applicable duties. The B/E is generally filed on the basis of a proforma invoice. Please clarify whether SEZ unit is required to raise a GST invoice at the time of removal or whether a commercial Invoice or challan is sufficient to remove the goods in DTA along with the duty paid copy of the B/E?
 

Firstly, it is not correct to say that the B/E is filed on the basis of the proforma invoice. Rule 48(1) of the SEZ Rules, 2006, says that the B/E must be filed along with invoice. That rule does not say whether it has to be a GST invoice or a commercial invoice, probably because the SEZ rules were drafted much before introduction of GST and the commerce ministry has made only some consequential amendments after GST was introduced. Having said that, let me add that Section 30 of the SEZ Act, 2005 says goods removed from SEZ to DTA shall be chargeable to duties of Customs as leviable on such goods when imported. It makes no reference to charging IGST. The proviso to Section 5(1) of the IGST Act, 2017 says that IGST on imported goods shall be levied and collected in accordance with the provisions of Section 3(7) of the Customs Tariff Act, 1975. It makes no reference to charging the IGST on goods removed from SEZ to DTA. The IGST on such goods must, therefore, be charged on the basis of main Section 5(1) of the IGST Act, 2017. The conclusion that emerges is that the IGST must be charged through a GST invoice issued in accordance with Section 31 of the CGST Act, 2017 and not through the B/E. This is the theoretical position but that is not how the practice works. The NSDL system that is now linked with the Customs EDI system automatically treats the goods going from SEZ to DTA as the equivalent of imports and charges the IGST on the B/E and the IGST so paid through B/E flows straightaway to GSTR-2A. I think the practice is expedient and does not require you to prepare a GST invoice. A commercial invoice would do. The legal provisions, however, need a tweak. The CBIC should look into the matter and rectify the legal lacuna.
 

We have sold our duty credit scrips and not charged GST as s.no.122A of the notification 2/2017-IT (rate) dated 28.06.2017 fully exempts duty credits falling under 4907. Please advise whether the value of such duty credits will form part of turnover while applying Rule 42 of the CGST Rules, 2017.
 

No. After the insertion of clause (d) in the Explanation-1 to Rule 43 of the CGST Rules vide Notification No. 14/2022 dated 05-07-2022, the value of duty credit scrips shall be excluded from the value of exempt supply for the purpose of Rule 42 of the CGST Rules.


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