GST cannot be levied on Duty- Free Shops to outgoing Passengers: Bom HC

October 11, 2019

The Bombay High Court in a landmark judgment has held that the outgoing passengers cannot be charged Goods and Services Tax (GST) on the Duty-Free Shop (DFS) at the Mumbai Airport. The Court has also stated that these shops are entitled to input tax credit refund.

The HC has observed that the duty-free shops are within the limits of the customs area and thus the supply of imported goods to and from duty-free shops does not cross the customs boundaries of India constituting the supply of goods to outgoing passengers an “export”.

In the present case, a duty free shop in the name Flemingo Travel Retail Ltd. at Mumbai International Airport took an exception to an order of a Deputy Commissioner of Sales Tax wherein refund of input tax credit in pursuance to a sale of duty free goods from the duty free shops at the departure area of airport was denied.

The shop stated that they are not liable to pay as they were paying guaranteed fees/ concession fees to the Mumbai International Airport under a concession agreement for grant of use of licensed premises rights of duty-free shops in the departure or arrival area of international airport. However, the state had stated that the nomenclature ‘Duty-Free Shop’ does not exclude the shop from paying indirect tax.

The Court, while examining Article 286 of the Constitution which deals with restrictions regarding imposition of tax on sale or purchase of goods, has stated that “The supply made in the course of import into India or in the course of export out of India, cannot be subjected to any tax.” It has further stated that a discriminatory treatment cannot be given by the State of Maharashtra when several other states are granting a refund.


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