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Refund of cess to sez

16 March 2023

whether cess paid on purchase of coal supplied to sez without paying tax is eligible for refund? please also give section or notification reference

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CA Rakesh Ishi (Working at Private Company) (7995 Points)
Replied 16 March 2023

According to Section 11(6) of the Central Goods and Services Tax (CGST) Act, 2017, the Government may refund the amount of any cess paid on the supply of goods or services that are exempt from tax or zero-rated.

In the case of the supply of coal to a Special Economic Zone (SEZ) unit without payment of tax under notification number 12/2017-Central Tax (Rate) dated 28th June 2017, the supplier is eligible for a refund of the cess paid on such supplies.

This is further clarified by Circular No. 54/28/2018-GST dated 9th August 2018, which states that the supplier of coal to an SEZ unit without payment of tax is eligible for a refund of the cess paid on such supplies. The circular also specifies the procedure for claiming the refund of cess in such cases.

Therefore, the cess paid on the purchase of coal supplied to an SEZ unit without payment of tax is eligible for a refund, subject to the conditions and procedures specified under the GST laws and regulations.