The Authority for Advance Ruling, Gujarat, has held that a unit in SEZ is not liable to pay GST under RCM for the services received from DTA such as services of an advocate, provided it furnished a Letter of Undertaking. This ruling was given in respect of an application sought by Waaree Energies Limited.
In addition to various notifications, the AAR bench also relied on a clarification given by the CBIC on a similar issue to a SEZ unit in IFSC – Gandhinagar, which stated that a SEZ unit can procure RCM services without payment of tax if it furnished a letter of undertaking.
The Appellate Authority for Advance Rulings, Maharashtra, in the case of Portescap, a private limited company, had also held likewise.
While advance rulings do not set a judicial precedent, they do have a persuasive effect during assessments. This ruling could support SEZ units in India, who are facing litigation on this issue.
Source: The Times of India
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