Tax liability on last sale proceeding sale to SEZ area

TAX LIABILITY ON LAST SALE PRCEEDING SALE TO SEZ AREA.

LAST SALE PRECEEDING SALE TO SEZ AREA. IS EXEMPT UNDER SECTION 5(3) OF THE CENTRAL SALES TAX ACT, 1956.

RELEVANT PROVISONS:

Provisions of the Central Sales Tax Act, 1956:

Section 5(3): Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export.

Provisions of  The Special Economic Zones Act, 2005

2. Definitions.-In this Act, unless the context otherwise requires,-

Section2(i) "Domestic Tariff Area" means the whole of India (including the territorial waters and continental shelf) but does not include the areas of the Special Economic Zones;

Section 2(m) "export" means-

(i) ………………………………………
(ii) supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer; or

(iii) xxxxxxxx

Section 2 (za) "Special Economic Zone" means each Special Economic Zone notified under the proviso to sub-section (4) of section 3 and sub-section (1) of section 4 (including Free Trade and Warehousing Zone) and includes an existing Special Economic Zone;

Section 2 (zc) "Unit" means a Unit set up by an entrepreneur in a Special Economic Zone and includes an existing Unit, an Offshore Banking Unit and a Unit in an International Financial Services Centre, whether established before or established after the commencement of this Act;

Section 51. Act to have overriding effect. 51. Act to have overriding effect.-The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.

53. Special Economic Zones to be ports, airports, inland container depots, land stations, etc., in certain cases.

53. Special Economic Zones to be ports, airports, inland container depots, land stations, etc., in certain cases.-A Special Economic Zone shall, on and from the appointed day, be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorised operations.

(2) A Special Economic Zone shall, with effect from such date as the Central Government may notify, be deemed to be a port, airport, inland container depot, land station and land customs stations, as the case may be, under section 7 of the Customs Act, 1962 (52 of 1962):

Provided that for the purposes of this section, the Central Government may notify different dates for different Special Economic Zones. 

The above sited provisions of The Special Economic Zones Act, 2005 makes it clear that  delivery of goods in an Special Economic Zone is a delivery  out side the Custom frontiers of India and a sale to a Unit in or Developer in the Special Economic Zone is an “EXPORT” and a seller from Domestic Tariff Area who is making sale to a “Unit or Developer” in the SEZ is making an export.

And a sale immediately preceding an export is exempt to sales tax subject to production of ‘H’ Form in view of the provisions of Section 5(3) of the Central Sales Tax Act, 1956.

In view of the above, a dealer how had an order from a Unit or Developer in SEZ Area can make purchases free of tax against ‘H’ Form.

DEVINDER JAIN, VATP

M: 9810272568

e-mail: delvatp@gmail.com