Lessee obligation to remit GST on airport authority services despite ITC/refund claims; ordered to repay Rs.3.83Cr with interest

The dominant issue was whether the lessee was liable to discharge GST on services rendered by airport authorities despite claiming entitlement to input tax credit/refund on goods. The HC reasoned that withholding payments pursuant to interim orders did not extinguish the substantive obligation to pay GST on services: statutory liability and the concession agreement oblige the lessee to remit tax to the service providers and then seek ITC or refund from the Union/authorities. The HC further held interest accrues on withheld sums under the interim order. Consequently, the lessee was directed to reimburse Rs. 3,83,38,993 to the airport authorities within four weeks with interest.

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Issues Involved:
1. Applicability of GST on Duty Free Shops (DFS).
2. Refund claim of GST paid by the petitioner.
3. Liability to pay GST on services availed from the Airport Authority.
4. Compliance with interim orders and the Concession Agreement.

Summary:

1. Applicability of GST on Duty Free Shops (DFS):
The petitioner, operating DFS at Amritsar airport, contended that no GST under CGST, IGST, or PGST Acts could be levied on their operations. The Union of India/respondent No.1 argued that any refund should be claimed from them as respondents No.3 and 4 deposited GST on behalf of the petitioner.

2. Refund Claim of GST Paid by the Petitioner:
The petitioner sought a refund of Rs. 40,71,047.79 collected by respondents No.3 and 4, arguing wrongful application of GST laws. The court noted the Hon'ble Supreme Court's decision in Civil Appeal Diary No.24366 of 2022, affirming that no indirect tax could be imposed on DFS at airports, making them entitled to refunds without technical objections, including limitation.

3. Liability to Pay GST on Services Availed from the Airport Authority:
The Hon'ble Third Judge clarified that while the petitioner was not liable to pay GST on goods, they were liable for GST on services availed from the Airport Authority. The petitioner was entitled to Input Tax Credit (ITC) on GST paid for services, which could be used for tax payment or refund claims.

4. Compliance with Interim Orders and the Concession Agreement:
Interim orders dated January 04, 2018, and April 30, 2018, restrained respondents from levying GST but required the petitioner to furnish indemnity bonds and bank guarantees. The court directed the petitioner to reimburse Rs. 3,83,38,993/- to respondents No.3 and 4 with interest at 8% per annum and comply with the Concession Agreement, which mandated paying GST on services provided by the Airport Authority. The petitioner must claim ITC and/or refunds as per legal procedures.

Final Directions:
The petitioner is directed to reimburse the GST amount with interest to respondents No.3 and 4 within four weeks and make necessary applications for ITC/refund, which respondents No.1, 5, and 6 must consider within eight weeks. The case and all connected applications are disposed of accordingly.

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