2026-VIL-580-MAD
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SGST High Court Cases

GST - Demand on Reverse Charge Mechanism basis on professional and consultancy services availed by SEZ unit for failure to produce the Letter of Undertaking and SEZ Certificate - Department contended that the unit is not outside the GST framework merely by virtue of being an SEZ unit - Whether an SEZ unit is liable to pay tax under the RCM on services that qualify as zero-rated supplies under Section 16 of the IGST Act, 2017 – HELD - The assessment orders were passed primarily because the petitioner failed to produce the Letter of Undertaking and SEZ Certificate before the adjudicating authority for verification. The Section 16 of the IGST Act treats supplies to an SEZ unit for authorized operations as zero-rated supplies, and where the supplier is not liable to pay tax, the recipient SEZ unit has to pay tax under the Reverse Charge or effect supplies without payment of tax under a valid Letter of Undertaking. Merely being an SEZ unit does not place the entity entirely outside the GST framework, but the assessee must establish its entitlement to benefits by producing necessary documents - The controversy can be effectively resolved by affording the petitioner a further opportunity to place the relevant documents before the adjudicating authority, as the requisite SEZ Certificate was subsequently produced before the court itself during hearing - The impugned assessment orders stand set aside. The petitioner is directed to file an additional reply, if any, and produce the Letter of Undertaking and SEZ Certificate before the adjudicating authority. The adjudicating authority shall thereafter consider the petitioner's claim in light of Section 16 of the IGST Act and pass fresh orders on merits and in accordance with law after affording due opportunity to the petitioner – The petition is disposed of
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