• Dated 19^th September, 2025

No GST bite on Bauxite Logistics to SEZ, Rules AAR Odisha

BRIEF FACTS:

The petitioner, a registered GST entity in Odisha, received a work order from M/s Pioneer Aluminium Industries Limited (formerly Anrak Aluminium Ltd.), a Special Economic Zone (SEZ) unit located at APIIC Industrial Park, Anakapalle District, Andhra Pradesh. Under the work order, the applicant was required to provide comprehensive logistics services in Odisha, which included loading of bauxite at Kodingamali Mines, transportation to Kakiriguma Railway Siding, stacking and storage, rake loading, re-handling at siding, and miscellaneous ancillary activities such as water sprinkling, traffic management, manpower deployment, track and rake cleaning, provision of tarpaulins, lighting, DG sets, and barricades. The SEZ unit, engaged in the authorized operation of manufacturing Alumina, procured bauxite from Odisha Mining Corporation Ltd. for which the applicant was appointed as service provider. While the work order mentioned that GST would not be applicable as the recipient was an SEZ unit, the applicant sought an advance ruling to clarify whether such services rendered outside the physical premises of the SEZ but in relation to its authorized operations would be liable to GST, and if so, the applicable rate and nature of supply.

ASSESSEE'S CONTENTION:

The Assessee, contended that it had entered into a work order with M/s Pioneer Aluminium Industries Ltd., an SEZ unit, for providing logistics services related to handling of bauxite. According to the applicant, although the services of loading, transportation, stacking, and rake loading were carried out in the domestic tariff area (i.e., outside the physical boundaries of the SEZ), they were rendered for the benefit of the SEZ unit. The applicant pointed out that as per the work order, it was specifically mentioned that GST would not be applicable since the service recipient is situated in an SEZ zone. However, the applicant expressed uncertainty and sought clarity from the Authority for Advance Ruling, as it was of the opinion that since the services were performed in Odisha, outside the SEZ premises, they might be treated as taxable under the GST Act. Accordingly, the applicant requested an advance ruling to determine whether such services qualify as taxable services under GST, and if so, the applicable rate of tax and whether the same would be treated as inter-state or intra-state supply.

DEPARTMENT'S CONTENTION :

The Department contended that the jurisdictional tax authority did not file any specific written submissions or objections in response to the application for advance ruling. The Authority for Advance Ruling noted that no opinion or contention had been placed on record by the concerned officer regarding the taxability of the services in question. As a result, the matter was decided primarily on the basis of the facts presented by the applicant, the provisions of the GST law, and the documents submitted, including the approval granted to the SEZ unit for carrying out authorized operations.

DECISION:

The Authority for Advance Ruling, Odisha, decided that the services of loading bauxite at mines, transporting it to the railway siding, stacking, rake loading, and other related ancillary activities provided by M/s Advait Mining and Constructions LLP to M/s Pioneer Aluminium Industries Ltd., a Special Economic Zone unit, qualify as zero-rated supply under Section 16(1)(b) of the IGST Act, 2017. It further held that such supply of services shall be treated as an inter-state supply in terms of Section 7(5)(b) of the IGST Act. Consequently, the applicant will be entitled to all benefits attached to zero-rated supplies, including eligibility to claim input tax credit and refund, if applicable. The ruling was, therefore, given in favour of the assessee.

BTA's COMMENT:

In conclusion, the Authority for Advance Ruling, Odisha, held that the logistics and cargo handling services provided by M/s Advait Mining and Constructions LLP to M/s Pioneer Aluminium Industries Ltd., an SEZ unit, are to be treated as zero-rated supplies under Section 16(1)(b) of the IGST Act, 2017, as they are directly connected with the authorized operations of the SEZ unit. Further, in terms of Section 7(5)(b) of the IGST Act, such supplies are to be regarded as inter-state supply irrespective of the location where the services are performed. Accordingly, the applicant is entitled to all benefits available under the zero-rated supply provisions. The ruling was thus rendered in favour of the assessee.

Case Reference: M/s Advait Mining and Constructions LLP. [Order No. 03/Odisha-AAR/2025-26, decided on 10-7-2025]

Author: Madhurima Bose

Edited by: Shaily Gupta