AAR : Hotel accommodation & restaurant services consumed outside SEZs, taxable as ‘intra-State’ supplies

No Comments

Karnataka AAR holds that accommodation & restaurant services provided within premises of Hotel, to employees & guests of SEZ units cannot be treated as supply of goods and / or services to SEZ units in the State chargeable to Nil GST;

According to AAR, on reading Section 16(1)(b) of IGST Act and Rule 46 of CGST Rules together, it is clearly evident that supplies of goods and / or services towards authorized operations only shall be treated as supplies to SEZ Developer / unit; Notes that place of supply of services by way of lodging, accommodation by a hotel, shall be location of immovable property i.e. hotel as per Section 12(3)(b) of IGST Act, while place of supply in case of restaurant and catering services is the location where services are actually performed in terms of Section 12(4) of IGST Act;

Since in the instant case, applicant is located outside the SEZ, services rendered by it are neither part of authorized operations nor consumed inside SEZ, observes AAR; In view thereof, holds that rendition of services of restaurant, short term accommodation and banqueting / conferencing cannot be said to have been ‘imported or procured’ into SEZ unit / developer; Resultantly, rules that said services constitute ‘intra-State’ supplies and are taxable accordingly : Karnataka AAR