2021 (6) TMI 32 - HC - GST

High Court directs GST payment & refunds for Duty-Free Shops

The High Court of Madras disposed of the Writ Petition by directing the petitioner to pay GST for specific periods and claim refunds accordingly, in line ... Zero rated supply - refund of input tax credit - revenue neutral character of tax liability - liability to pay GST on renting of immovable property within airport premises - refund under Section 54 of the CGST Act - verification of tax actually paid to Government before refundZero rated supply - refund of input tax credit - refund under Section 54 of the CGST Act - Whether the petitioner, operating Arrival and Departure Duty Free Shops inside the airport, is entitled to refund of input tax borne for the period July 2017 to December 2017 and February 2018 to March 2018. - HELD THAT: - The court records that there is no dispute that the petitioner is engaged in zero rated supply within the meaning of Section 16 of the Integrated Goods and Service Tax Act, 2017 and that refund applications in Form GST RFD-01A were filed and sanctioned for the periods concerned. The orders sanctioning refund for August 2017-December 2017 and for February-March 2018 were based on the Authority for Advance Ruling, Delhi decision as communicated by the Central Board of Indirect Taxes and Customs. Given that the petitioner can obtain refund of the incidence of tax by way of sanctioned refund orders, the court held that directing the Airport Authority to first collect and pay tax and then require the petitioner to seek refund would serve no useful purpose. The determinative reasoning is that the petitioner's entitlement to refund of input tax renders the tax liability in relation to supplies at the airport effectively revenue neutral for the petitioner.Petitioner entitled to refund of input tax for July 2017 to December 2017 and February 2018 to March 2018; no purpose in directing payment-then-refund route.Verification of tax actually paid to Government before refund - liability to pay GST on renting of immovable property within airport premises - Whether GST paid by the third respondent for the period 01.01.2018 to 30.06.2019 should be refunded to the third respondent. - HELD THAT: - The court noted that the third and fourth respondents had paid GST directly to the Government for the period 01.01.2018 to 30.06.2019 and the third respondent sought refund of that amount. The court directed that such sums be refunded to the third respondent but qualified the direction by requiring verification that the tax was indeed correctly paid to the credit of the Government as tax for the supply of such service to the petitioner. The reasoning recognises the payment made by the Airport Authority but conditions the refund on administrative verification of correct payment to avoid unjust enrichment or incorrect refunds.GST paid by third respondent for 01.01.2018 to 30.06.2019 ordered to be refunded to the third respondent, subject to verification that such tax was correctly paid to Government for the petitioner's supplies.Revenue neutral character of tax liability - liability to pay GST on renting of immovable property within airport premises - Treatment of GST for the period July 2019 to March 2021 when neither collection nor payment of GST occurred during subsistence of interim orders. - HELD THAT: - The court observed that during July 2019 to March 2021, owing to interim orders and decisions, the Airport Authority neither collected nor paid GST and estimated any tax liability. However, because the petitioner's position is that the incidence of tax is refundable (rendering the issue revenue neutral), the court exercised its discretion and directed that the taxing authority shall not charge GST from the third respondent for supplies to the petitioner alone for renting duty free shops within Chennai Airport for that period. The court declined to require retrospective charging and remittance for that interregnum period.For July 2019 to March 2021, the first respondent and its jurisdictional officer shall not charge GST from the third respondent for the petitioner's renting of duty free shops at Chennai Airport.Liability to pay GST on renting of immovable property within airport premises - refund under Section 54 of the CGST Act - How GST liability is to be treated prospectively from April 2021 onwards. - HELD THAT: - The court made clear that going forward, there shall be no concession: the third respondent is directed to charge GST on the petitioner from April 2021 and to pay the same to the Government. The petitioner may discharge GST and seek refund under the statutory refund mechanism where applicable. The directive balances recognition of the petitioner's refund entitlement for past periods with a clear prospective rule that GST must be charged and remitted from the stated date.From April 2021 onwards the third respondent shall charge GST on the petitioner and remit it to the Government; no further concession is permitted.Final Conclusion: Writ petition disposed: petitioner's refund entitlement for specified past periods recognised and refund directions issued subject to verification; no retrospective charging for the interregnum July 2019-March 2021; prospectively GST to be charged and remitted by the Airport Authority from April 2021, with petitioner to pursue refunds under statutory procedure where applicable. Issues:1. Imposition of Goods and Service Tax on Duty-Free Shops at Chennai International Airport.2. Refund claims for wrongly collected GST.3. Interpretation of tax liability for renting immovable property within the airport.4. Locus standi of the petitioner in GST payment matters.Analysis:1. The Writ Petition was filed seeking a Mandamus to prevent the imposition of Goods and Service Tax (GST) on Arrival and Departure Duty-Free Shops at Chennai International Airport. The petitioner argued that no tax should be payable for shops within the airport premises. The dispute arose from the application of Central Goods and Service Tax Act, 2017; Integrated Goods and Service Tax Act, 2017; and Tamil Nadu Goods and Service Tax Act, 2017 to the petitioner's shops. The relief sought was a refund of wrongly collected GST amounting to Rs. 3,31,30,829.85.2. The petitioner had previously filed similar Writ Petitions in Kerala High Court and Madurai Bench. The Madurai High Court disposed of a related Writ Petition, indicating that the petitioner could be entitled to a refund of Input Tax Credit (ITC) and need not pay GST for a specific period. The petitioner sought a similar order for the current Writ Petition, citing that GST was charged by the respondents between July 2017 and December 2017, leading to refund claims under relevant GST laws.3. The Court considered the tax liability issue for the renting of shops within the airport premises. The petitioner's counsel argued that since the petitioner was engaged in zero-rated supply at the Duty-Free Shops, they were eligible for refunds of input tax. The Court acknowledged the revenue-neutral nature of the issue and directed the petitioner to pay GST for specific periods and claim refunds accordingly, in line with the decision of the Madurai Bench.4. The locus standi of the petitioner in GST payment matters was challenged by the respondents, contending that the petitioner was not responsible for GST payment on shop rentals. The Court analyzed the arguments from all parties and concluded that the petitioner, engaged in zero-rated supply, was entitled to refunds based on input tax claims. The Court directed the charging of GST for specific periods and subsequent refunds, emphasizing that the issue was revenue neutral.In conclusion, the High Court of Madras disposed of the Writ Petition by providing specific directions regarding GST payment, refunds, and the revenue-neutral nature of the tax liability issue for Duty-Free Shops at Chennai International Airport.