SEZ supplies and refund: endorsement, authorised operations and the disputes

The supply is zero rated, but the refund depends on a stamp and on a list of operations you did not draft.

The three requirements

The recipient must be a developer or a unit in a Special Economic Zone.

The supply must be for authorised operations, which are the operations approved for that unit. A supply of something outside the approved list is not zero rated even though the recipient is in the zone.

The evidence prescribed by the rules must be produced, which in practice is the endorsement by the specified officer of the zone that the goods or services were received for authorised operations.

Where the claims fail

No endorsement, or an endorsement in a form the officer does not accept. This is the single largest cause of rejection and it is almost entirely procedural.

The operation is not on the approved list. Common examples are construction related services, canteen and hospitality services, and administrative services procured for the unit.

Services physically performed outside the zone, where the department contends the service was not received in the zone for authorised operations.

A mismatch between the invoice, the endorsement and the return, particularly where the unit's GSTIN differs from the developer's.

How to protect the position

Obtain the endorsement contemporaneously, invoice by invoice, and not at the time of the refund claim. An endorsement obtained a year later is available but it invites scrutiny.

Ask the unit for a copy of its approved list of operations and match your supply against it before invoicing. Where the supply is not covered, price it as a taxable supply.

Record the place of performance for services in the contract and in the deliverable, so that receipt in the zone can be established.

For a developer, keep the approval and the co developer documentation with the refund file, because the department frequently asks for it at the last stage.

What to do on Monday

1. Obtain endorsements invoice by invoice at the time of supply, not at the time of the claim.

2. Hold a copy of each customer unit's approved operations list and match supplies against it before invoicing.

3. Record the place of performance and the receiving unit in the contract for services.

4. Keep the developer or unit approval documents in your own refund file.

Questions we are asked on this

Is every supply to an SEZ unit zero rated?

Only supplies for authorised operations. The recipient's location in the zone is necessary but not sufficient.

Is the endorsement legally mandatory?

The rules prescribe evidence of receipt for authorised operations, and the endorsement is the accepted proof. Practically, claims without it are rejected.

Can we supply on payment of IGST instead?

Yes, and claim a refund of the tax paid. That route is common where the endorsement is difficult to obtain, but the authorised operations condition still applies.

What about services performed at our own premises?

Establish that the service was received by the unit for authorised operations. The place of performance is a factor the department uses, and the contract should address it.

Does the unit's default affect our refund?

It should not, but a unit that cannot produce its approvals makes the claim harder. Keep copies yourself.

In this cluster

• GST refunds: every category, every form, every deadline
• Export refunds: the LUT route versus the IGST route
• VKC Footsteps: why input service tax stays stuck in an inverted duty structure
• Provisional refund of ninety percent: the mechanism and how to keep it
• Replying to RFD-08: the refund rejection notice
• Deficiency memos in RFD-03 and the limitation reset problem
• Interest on delayed refunds under Section 56
• Unjust enrichment in GST refunds: when it applies, and when it does not
• Section 77: refund where tax was paid under the wrong head
• Deemed exports and the refund to the recipient

GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.