IGST On FTWZ Transactions: Retrospective Amendment To Put Dichotomy To Rest

For a while now, questions have been mounting as to whether the Free Trading and Warehousing Zones ('FTWZs') conceived under the Special Economic Zones Act, 2005 ('SEZ Act') can be treated as a 'bonded warehouse' as defined under the Customs Act, 1962 ('Customs Act'). This question is pertinent, as it is standard practice in trade for goods to be bought and sold within FTWZ premises, often changing multiple hands, before they are either exported therefrom or cleared to the Domestic Tariff Area ('DTA').

If the answer to the question above is yes, such transactions would not be liable to IGST until they are cleared to the DTA. There have been divergent rulings on this issue by multiple Authorities for Advance Ruling ('AAR').