Are You Supplying to SEZ Developer or SEZ Units – Know Your GST Compliances Here

Section 7(5)(b) of IGST Act,2017 says “Supply of goods or services or both to or by a Special Economic Zone developer or a Special Economic Zone unit shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.”

Zero rated supply (supply to SEZ)

Section 16 (1) of IGST Act, 2017 “supply of goods or services or both to a Special Economic Zone
developer or a Special Economic Zone unit will be considered as ZERO RATED supply”

Input Tax Credit

Section 16(2) of IGST Act, 2017 “Subject to the provisions of sub-section (5) of section 17 of the
Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.”

Refund of tax

Section 16(3) of IGST Act, 2017 “A registered person making zero rated supply shall be eligible to
claim refund under either of the following options, namely

1. under bond or Letter of Undertaking without payment of integrated tax and claim refund of
unutilized input tax credit

2. supply goods or services or both on payment of integrated tax and claim refund of such tax
paid on goods or services or both supplied.”

Invoices

Section 31 and rule 46 of CGST Act, 2017 Says

“In the case of the export of goods or services, the invoice shall carry an endorsement “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS ON PAYMENT OF INTEGRATED TAX”

or “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX”,

as the case may be, and shall, in lieu of the details specified in clause (e), contain the following details, namely,-
(i) name and address of the recipient;
(ii) address of delivery; and
(iii) name of the country of destination:”

Bond –Cum-Legal Undertaking for SEZ unit is Form H of SEZ Act, 2005 is for the Bond – Cum –Legal Undertaking for SEZ unit

Format of Form H is as under :-

Form H

BOND-CUM- LEGAL UNDERTAKING FOR SPECIAL ECONOMIC ZONE UNIT

(See rule 22)

A bond-cum- legal undertaking made this …………. day of ………….20…. between M/s. …………………….. (legal
status i.e. a company or firm), a unit in a Special Economic Zone (SEZ) having its registered office at
…………. and factory/service unit at …………. (hereinafter referred to as "the obligors" which expression
shall, unless repugnant to the context or meaning thereof, include its heirs, successors, executors,
administrators, liquidators, legal representatives and assignees) hereby hold and firmly bind
ourselves jointly and severally unto the President of India acting through the Development
Commissioner of …………. Special Economic Zone and the Specified Officer (hereinafter jointly
referred to as "Government") in the sum of Rs. …………. (Rupees …………. only) for which payment to be
well and truly made, we, the obligors, bind ourselves by these presents.
Whereas the Development Commissioner has issued Letter of Approval No. …………. dated …………. to
the obligors, containing the terms and conditions for setting up and operating the unit in the Special
Economic Zone, including the requirement of achieving positive Net Foreign Exchange Earning as
provided under the Special Economic Zones Rules, 2006 and orders made thereunder, hereinafter
referred to as the rules, and the obligors have duly accepted the terms and conditions of the said
Letter of Approval, vide their letter No. ………… dated …………..
And whereas we, the obligors have been authorized the use of the premises, namely, …………. in the
…………. Special Economic Zone wherein dutiable goods, imported or procured from Domestic Tariff
Area or procured from Export Oriented units or Software Technology Park units or Electronic
Hardware Technology Park units or Special Economic Zone units in the same Special Economic
Zone or other Special Economic Zone for the purpose of carrying out the authorized operations,
hereinafter referred to as the goods availing exemption from payment of duties, taxes or cess or
drawback and concessions under sections 7 and 26 of the Special Economic Zones Act, 2005 could
be admitted and deposited for a period which is co-terminus with the validity period of Letter of
Approval.
And whereas the obligors can clear duty free imported goods from ports or airports or inland
container depots or specified land custom stations or customs warehouse or international
exhibitions held in India, as the case may be, for admission into the Special Economic Zone.
And whereas the obligors may remove the goods or goods manufactured or services, without
payment of duty and dispatch the same by air or sea or rail or road or courier or post for export to
foreign countries or supply to other export oriented units or to electronic hardware technology
park units or to software technology park units or to units in the same or other Special Economic
Zone, without payment of duty.
And whereas the obligors have been permitted to remove the said goods or goods partially
manufactured or processed therefrom to any other place in the Domestic Tariff Area without
payment of duty for the purpose of sub-contracting or test or repair or calibration or re-

engineering or re-conditioning or display and to be returned to the unit thereafter as per the
provisions of the Special Economic Zones Act, 2005 and rules and orders made thereunder.
And whereas the Specified Officer has permitted provisional assessment of goods brought into the
special economic zone or manufactured by the obligors from time to time which could not be
finalized for want of full information as regard to value or description or quality or the proof
thereof or for the non-completion of the chemical or other tests in respect thereof or otherwise at
the request of the obligors.
Now the conditions of the above written bond-cum-legal undertaking are that:
1. We, the obligors shall abide by all the provisions of the Special Economic Zones Act, 2005
and the rules and orders made thereunder in respect of the goods for authorized operations
in the Special Economic Zone.

2. We, the obligors shall pay on or before a date specified in a notice of demand, all duties
chargeable on the goods not removed on termination of validity here-in- stated-above of the
Letter of Approval.

3. We, the obligors shall furnish to the Asstt. Commissioner of Customs or Dy. Commissioner of
Customs, as the case may be, at port or airport or inland container depot or land customs
station or a warehouse evidence to his satisfaction within a period of forty-five days from
the date of dispatch from any warehouse or unit that the said goods have duly arrived in our
unit in the Special Economic Zone.

4. We, the obligors shall be wholly and solely responsible for ensuring that there shall be no
pilferage during transit of the said goods when dispatched from the place of import or the
factory of manufacture or from the warehouse to the unit in the Special Economic Zone and
vice versa and we, the obligors, shall pay the duty on pilfered goods, if any.

5. We, the obligors shall maintain accounts of all goods imported or procured from the
Domestic Tariff Area or consumed and utilized, in proper form, including those remaining in
stock and those sent temporarily out side the Special Economic Zone in the Domestic Tariff
Area under our obligation and shall produce such accounts for inspection of the Specified
Officer or Authorized Officer.

6. We, the obligors shall intimate the date of commencement of the production/service
activities for export within one month of such date to the Development Commissioner.

7. We, the obligors shall, after the commencement of production or service activities, submit
to the Development Commissioner and the Specified Officer, Annual Performance Return
within a period of  1 [ one hundred eighty days ] following the close of financial year, in the
form prescribed under the Special Economic Zones Rules, 2006, certified by a Chartered
Accountant. In case of wrong submission of such information or failure to submit such
information within the stipulated time, the permission granted to us for carrying out the
authorized operations may be withdrawn and/or the permission for further imports and
sales in the Domestic Tariff Area may be stopped.

8. We, the obligors shall achieve positive Net Foreign Exchange Earning and shall fulfil other
conditions stipulated in the Letter of Approval and in case of failure to achieve the said
positive Net Foreign Exchange Earning, except when the fulfilment of such conditions is
prevented or delayed because of any law & order, proclamation or regulation or ordinance
of the Government, we shall be liable for penal action under the provisions of the Foreign
Trade (Development and Regulation) Act, 1992.

9. We, the obligors shall pay the duties on the goods and services sold in Domestic Tariff Area
in terms of Special Economic Zones Act, 2005 and the rules and orders made thereunder.

10. We, the obligors shall refund an amount equal to the benefits of exemptions, drawback, cess
and concessions availed on account of the goods and services in terms of provisions of rule
25 of Special Economic Zones Rules, 2006.

11. We, the obligors shall not dispose of goods and services admitted into the Special Economic
Zone or goods manufactured or services to the Domestic Tariff Area except as provided
under Special Economic Zones Act, 2005 and the rules and orders made thereunder.

12. We, the obligors shall comply with the conditions and limitations stipulated in the rules on
temporary removal of goods to the Domestic Tariff Area, without payment of duty, for the
purposes of sub-contracting or test or repairs or reconditioning or processing or display.

13. 13. We, the obligors shall not change the name and style under which we, the obligors are
doing business or change the location of the manufacturing premises except with the
written permission of the Development Commissioner.

14. We, the obligors shall intimate any changes in the Board of Directors/Partners, telephone
No., E-mail address, Web-Site, Passport No., Bank Address and Factory address, forthwith,
to the Development Commissioner and the Specified Officer.

15. The Government through the Specified Officer or any other authorized officer may recover
the sums due from the obligors as provided for in condition 2 above.
Provided that the President of India shall, at his option, be competent to make good all the
loss and damages from the amount of the bond or by endorsing his rights under the above
written bond or both.

16. Any other order issued by the Central Government in this regard shall be final and binding
and we, the obligors hereby undertake to comply unconditionally with such an order.

17. We, the obligors shall be bound by the changes, if any, made in the provisions of the Special
Economic Zones Act, 2005 and the rules.

18. Any stamp duties payable on this document or any document executed thereunder shall be
borne by us.
If each and every one of the above conditions is duly complied with by us, the obligors, the above
written bond-cum-legal undertaking shall be void and of no effect, otherwise the same shall remain
in full force and effect and virtue.

It is hereby declared by us, the obligors, and the Government as follows –
1. The above written bond-cum-legal undertaking is given for the performance of an act in
which the public are interested.
In these presents the words imposing singular only shall also include the plural and vice
versa where the context so requires;
In witness whereof these presents have been signed this day ………of ……….. 20….
hereinbefore written by the obligor(s).
Place Signature of the Obligor
Date Name and Residential address
Witness (1) Address (1) Occupation (1)
(2) Address (2) Occupation (2)
Accepted for and on behalf of the President of India on ….. day of … 20….
Signature and date Signature and date
Name …………  Name …………
Development Commissioner/ Jt./Dy./Asstt. Commissioner of Customs
Joint/Deputy Development Commissioner