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The supply of non-alcoholic beverages/ingredients to such beverages, to SEZ units using Coffee vending machines by the applicant, do not qualify as zero rated supply

Shanti Prime Publication Pvt. Ltd.

Supplies made to SEZ—In the instant case, the applicant is engaged in supply of non-alcoholic beverages to SEZ units using coffee vending machines. Question before authority is that “Whether supply of non-alcoholic beverages to SEZ units using coffee vending machines is in the nature of zero rated supply as defined under Section 16 of the IGST Act 2017?” The Applicant contends that all supplies to SEZ, without any distinction, have been declared to be zero-rated supplies by Section 16 of the IGST Act' 2017. Accordingly, the applicant is eligible to claim refund of the tax paid on inputs used for such supplies. The applicant also contends that they are entitled to make the said supplies under a bond or letter of undertaking as provided in Rule 89 of CGST Rules 2017. Authority for Advance Ruling, Karnataka held that:—The Rule related to refund stipulates that the supply, in respect of which tax had been paid and refund is sought, shall be necessarily for authorized operations. In other words the sine qua non or indispensible element is that the supply has to be certified by the proper officer as constituting authorized operations. Benefit flowing out from the SEZ Act, 2005, accrues to anyone only when the condition of authorized operations is fulfilled. Therefore even in the event of the IGST Act, 2017, not explicitly using the term 'authorised operations' in Section 16(1)(b), it is implicit that the supply of goods or services or both described in Section 16(1)(b) have to be read as in relation to authorized operations. The applicant has not made out a case that the activity undertaken by them is certified as an authorized operation by the proper officer of the SEZ. We are, thus, of the considered opinion that the activity undertaken by the applicant does not qualify to be a zero-rated supply. The supply of non-alcoholic beverages/ingredients to such beverages, to SEZ units using coffee vending machines by the applicant, do not qualify as zero rated supply, as defined under Section 16 of the IGST Act, 2017.[2018] 51 TUD 317 (AAR-MAHARASTRA)