SEZ units are not exempt from compensation cess under GST
The Andhra Pradesh High Court has ruled that units in Special Economic Zones (SEZs) are not exempt from paying compensation cess under the Goods and Services Tax (GST) on imported goods. The court emphasized that the SEZ Act of 2005 is a self-contained law providing exemptions, and for Section 7 to apply, the tax or cess must be referenced in the First Schedule of the SEZ Act. As the GST Compensation cess is not mentioned, the court held that it is not exempt for SEZ units.
NEW DELHI: The Andhra Pradesh High Court has held that no exemption from payment of compensation cess under the Goods and Services Tax (GST) is available on import of goods by units in Special Economic Zones (SEZs). This decision was taken in the case of Maithan Alloys which was engaged in the business of manufacturing ferro alloys and was established as an SEZ unit.
The high court observed that Sections 7, 26 and 50 of the SEZ Act, 2005, are the three main provisions which allow the SEZ units to claim the exemptions of duties, tax, cess and certain drawbacks and concessions. The SEZ Act is a self-contained law that provides exemptions from various taxes and duties, including those on goods imported and exported by developers and units in SEZs. Therefore, the exemptions have to be looked into from the provisions of the said Act and not from elsewhere.
