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CA Final · Indirect Tax Laws · Import and Export Under GST

Konark Steel Ltd supplied goods to a unit in a Special Economic Zone as a zero-rated supply without payment of integrated tax. Which statement correctly reflects the position under Rule 96A?

The bond or LUT requirement in Rule 96A(1) applies, with necessary changes, to zero-rated supplies of goods or services to an SEZ developer or unit made without payment of integrated tax. Konark must therefore furnish a bond or LUT before making the supply.

  1. ARule 96A does not apply, as bonds can be used only for exports outside India
  2. BThe bond or LUT provisions of sub-rule (1) apply mutatis mutandis to such supply to an SEZ unit or developerCorrect
  3. COnly a Letter of Undertaking is allowed and a bond is not permitted for SEZ supplies
  4. DA bond is needed only if the supply is of services

Explanation

Rule 96A(6) states that sub-rule (1) applies mutatis mutandis to zero-rated supply of goods or services or both to an SEZ developer or unit without payment of integrated tax. So the bond or LUT requirement extends to such supplies. The other options add restrictions not found in the rule.

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