Gujarat AAR Declines to Rule on Endorsement Requirement for Intra-SEZ Zero-Rated Supplies

The Gujarat Authority for Advance Ruling (GAAR) on 8 May declined to answer an application filed by Waystar Properties LLP seeking clarity on whether services supplied between Special Economic Zone (SEZ) entities would qualify as “zero-rated supplies” in the absence of invoice endorsement from the Specified Officer. The Authority held that the questions raised did not fall within the scope of matters on which an advance ruling may be sought under Section 97(2) of the CGST Act.

Waystar Properties LLP, operating from GIFT City SEZ, approached the Authority seeking clarification on the GST treatment of services rendered to other SEZ units and SEZ developers. The applicant submitted that although Section 16 of the IGST Act grants zero-rated status to supplies made for authorized operations, practical difficulties had arisen because SEZ authorities were not endorsing invoices for intra-SEZ transactions.

According to the applicant, the DTA Service Procurement Form (DSPF) mechanism prescribed under the SEZ framework was intended only for supplies made from Domestic Tariff Area (DTA) units to SEZ entities and not for transactions taking place between SEZ units themselves. The applicant argued that insistence on invoice endorsement in such cases created avoidable compliance difficulties despite both supplier and recipient operating under valid Letters of Approval (LOAs) issued under the SEZ framework.

The applicant further contended that where endorsement from the Specified Officer was unavailable, documentary evidence such as the recipient’s Letter of Approval (LOA), Eligibility Certificate, invoices, and declarations should be treated as sufficient proof that the services were used for authorized operations.

The Hon’ble AAR observed that the questions raised primarily related to documentary evidence and procedural requirements concerning proof of “authorized operations.” The Authority analyzed whether such issues could be adjudicated within the scope of Section 97(2) of the CGST Act governing advance rulings.

The Authority noted that Section 97(2) permits advance rulings only on specified issues such as classification, applicability of notifications, determination of time and value of supply, admissibility of input tax credit, liability to pay tax, requirement for registration, or whether a transaction amounts to a supply.

The Gujarat AAR held that the applicant’s questions regarding endorsement requirements and sufficiency of documentary evidence did not fall within the categories specified under Section 97(2) of the CGST Act. Consequently, the Authority refrained from answering all three questions raised by the applicant, including the issue of whether intra-SEZ supplies without endorsement would qualify as zero-rated supplies, stating, “We refrain from answering this question for the reasons discussed in the paras supra.“

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