2018 (12) TMI 1278 - HC - GST

Court dismisses petition for GST exemption on sales to international passengers at domestic airport

A1 Cuisines Private Limited Versus Union of India, And State of Maharashtra,

The court dismissed the petition seeking exemption from charging GST on sales to international passengers at a domestic airport and eligibility for input ... Levy of GST / import duty goods purchase from Duty free shops - shops situated before immigration clearance by a passenger - Exemption on sale of cosmetic products, perfumes etc. to the International passenger - refund of any input tax paid on input supplies and input services - Held that:- The Central Government holds that the transactions effected at the duty free shops at the arrival or departure of the International Airports in India might have taken place within the geographic territory of India, but for the purposes of levy of Customs Duties or any other taxes, the area of duty free shops shall be deemed to be the area beyond the customs frontiers of India. Although, the applicant bought goods from duty free shop at CSI Airport Mumbai, the same are deemed to be imported from across the Customs Frontiers of India and customs duty is payable on such goods. Since the applicant crossed the green channel without declarations and without payment of customs duty, the department has rightly proceeded against the Applicant. A passenger travelling on a domestic flight from Nagpur may or may not travel abroad, and the Customs Authorities would not be able to have effective check and control to verify whether the goods purchased from Domestic Airport at Nagpur are actually taken abroad by the passenger. Petition dismissed. Issues Involved:1. Exemption from charging applicable taxes under GST on sales to international passengers at a domestic airport.2. Eligibility for refund of input tax paid on supplies and services for a shop at a domestic airport.3. Applicability of the precedent set by the Supreme Court in the case of M/s. Hotel Ashoka.Detailed Analysis:Exemption from Charging Applicable Taxes under GST:The petitioner sought a Writ of Mandamus to direct the respondents to exempt them from charging GST on sales of cosmetic products, perfumes, etc., to international passengers from a shop at the Domestic Security Hold Area at Nagpur Airport. The petitioner argued that similar exemptions are provided to duty-free shops at international airports, and hence, the same benefit should be extended to their shop at Nagpur Airport, which serves international passengers departing from a transit international airport.The court examined the provisions of the GST laws, Customs Act, 1962, and relevant judgments. It noted that duty-free shops at international airports are treated as being outside the customs territory of India for tax purposes. However, this special status does not extend to shops located at domestic airports or before immigration clearance. The court emphasized that transactions at such domestic locations cannot be considered to have taken place outside the customs frontiers of India.Eligibility for Refund of Input Tax Paid:The petitioner also sought eligibility for a refund of any input tax paid on supplies and services for the proposed shop at Nagpur Airport. The court reiterated that the unique tax treatment applicable to duty-free shops at international airports does not apply to domestic airport shops. Therefore, the petitioner is not entitled to claim refunds on input taxes paid, as their shop would not qualify for the same tax exemptions.Applicability of the Precedent Set by the Supreme Court in the Case of M/s. Hotel Ashoka:The petitioner relied on the Supreme Court judgment in the case of M/s. Hotel Ashoka, which held that transactions at duty-free shops at international airports are deemed to take place outside India for tax purposes. The court analyzed this precedent and clarified that it specifically applies to duty-free shops located beyond the immigration counters at international airports. The court noted that the judgment does not extend to shops at domestic airports or areas before immigration clearance.The court referred to the Central Government's order in the case of Aarish Altaf Tinwala, which upheld the principle that duty-free shops at international airports are outside the customs territory for tax purposes. However, it distinguished this from the petitioner’s case, as the petitioner’s shop would be located at a domestic airport before immigration clearance.Conclusion:The court concluded that the petitioner’s request for tax exemptions and refunds is not supported by the legal framework governing GST and customs laws. The unique tax treatment for duty-free shops at international airports does not apply to shops at domestic airports or before immigration clearance. Therefore, the court found no merit in the petition and dismissed it.Judgment:The petition stands dismissed with the observation that no case is made out to issue any directions or notices in favor of the petitioner.