TaxTMI 
TaxTMI 
2017 (10) TMI 405
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.... various International Airports. These duty free shops are beyond Customs Barriers, and are Bonded Warehouses. 3. Refund claims were filed by the Respondent claiming the benefit of Notification No. 41/2012-ST dated 29.06.2012 seeking refund of Service Tax paid on the rent paid by them to the Airport Authorities for running their duty free shops situated in the departure lounge of various airports. 4. The Assistant Commissioner sanctioned refund of the Service Tax on such rent paid after having satisfied about the fulfilment of all the conditions prescribed in the said notification, and thus Orders-in-Original were passed in favour of the Respondent herein. 5. All the Orders-in-Original passed by the A.C., Service Tax-VII, Mumbai were examined under section 84 of the Finance Act, 1994 and separate appeals were filed by the Department before the Commissioner (Appeals) on the following grounds, as quoted in Order-in-Appeal- • The Refund sanctioning authority has erred 'in interpreting the Standing Order No. 03/2008 dated 3.3.2008 issued under F. No. Air Cus/67-01/2008 by the Commissioner of Custom Mumbai, in as much as the said Standing Order pertains to inst....
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....orted. • Further, reliance is placed on the case of Flemingo Duty Free Shops Pvt. Ltd. V/S State of Karnataka reported at 2009 (248) E.L.T. 69 (Kar.) also in their support. • ssuming but not accepting the fact that the transactions did happen in the Indian Territory, the Refund sanctioning authority has not appreciated the fact that the Duty Free Shop has sold the non-duty paid goods, which has been warehoused and has not been imported into India, to international passengers while still in the Indian Territory. By no stretch of imagination, the same can be considered as physical export of goods. It is only the individual passengers who would take the goods outside India and not the Duty Free Shop. • As per Notification No. 41/2012-ST dated 29.6.12, rebate is admissible for taxable services used for export of the goods. Export is defined under Section 2 (18) of the Customs Act, 1962, wherein export means taking out of India to a place outside India. In this case, the goods in 'question are warehoused goods which have not crossed customs barrier either for import or for export (Section 68 and Section 69 of the Customs Act, 1962). â....
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....s per section 71 of the Customs Act, since the goods were not cleared for home consumption, the goods that were sold at the duty free shop could be regarded as 'exports' as no Customs duty was levied on the same when cleared out of warehouse; > the respondent would be considered as an exporter and, the goods sold at the departure duty free shops to be export goods, within the meaning assigned in section 2(18) to (20) of the Customs Act; > the goods were brought from foreign countries into India and warehoused as imported goods in terms of Chapter IX of the Customs Act, hence the same shall have to be treated as imported goods under Customs Act; > the renting of airport premises at the departure module has a direct nexus with the export sale being made by the respondent as it is not possible to carry on the export sales at the Duty Free Shop at the departure terminals, without taking the duty free shops on rent from the Airport Authority of India; > there is no application of doctrine of unjust enrichment in case of export of goods. 7. Chief Commissioner of Service Tax reviewed these Orders-in-Appeal under Section 86 (2A) of the Finance Act, 1994 and directed ....
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....ovement of the goods by the new owner does not make the duty free shop exporter and therefore they do not seem to be eligible for refund under Notification No.41/2012-ST dated 29.06.2012. In view of the above, it appears that the Commissioner (Appeals), has erred in determining the goods sold at departure terminals situated at the Airports as export. 2.2. Also, since they are selling, the goods to their buyers it is most likely that they would have loaded their input costs on the sale price of the goods, which is a common business practice. No evidence has been discussed about the same by the Learned Commissioner (Appeals) to the effect that such cost of input service tax were not loaded on to the sale price of the goods. Thus, if the input service tax etc. is already a part of sale price of the goods, further refund of the same to the claimant may result in unjust enrichment. 2.3 Argument put forth by the Learned Commissioner (Appeals) at para-13 of his order reads:- "It is observed that in the case of Hotel Ashoka, the question before the Hon'ble Supreme Court was whether sale of goods at the duty free shops at the international airport are liable to sales tax /Vat u....
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....considered the rival submissions. 10. The Department heavily relies on Article 286 of the Constitution of India and the judgment in Hotel Ashoka Vs Asstt. Commissioner of Commercial Taxes, 2012 (276) ELT 433 (SC), which was also rendered in the case of 'similar duty free shops'. On the basis of the said judgment, the Duty Free Shop which is Customs Bonded Warehouse is considered by the Department as a space outside India. The said judgment was rendered by the Hon'ble Supreme Court after taking into consideration Article 286 of the Constitution of India, which reads as under- "286. Restrictions as to imposition of tax on the sale or purchase of goods.-(1) No law of a State shall impose, or authorise the imposition of, a tax on the supply of goods or of services or both, where such supply takes place- (a) outside the State; or (b) in the course of the import of the goods or services or both into, or export of the goods or services or both out of, the territory of India. (2) Parliament may by law formulate principles for determining when a supply of goods or of services or both in any of the ways mentioned in clause (1)" 10. In view of the above t....
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....ore the said goods had crossed the customs frontiers. 19. Thus, before the goods were imported in the country, they had been sold at the duty free shops of the appellant. 20. In view of the aforestated factual position and in the light of the legal position stated hereinabove, it is very clear that no tax on the sale or purchase of goods can be imposed by any State when the transaction of sale or purchase takes place in the course of import of goods into or export of the goods out of the territory of India. Thus, if any transaction of sale or purchase takes place when the goods are being imported in India or they are being exported from India, no State can impose any tax thereon. 23. Looking to the aforestated legal position, it cannot be disputed that the goods sold at the duty free shops, owned by the appellant, would be said to have been sold before the goods crossed the customs frontiers of India, as it is not in dispute that the duty free shops of the appellant situated at the International Airport of Bengaluru are beyond the customs frontiers of India i.e. they are not within the customs frontiers of India. 24. If this is the factual and legal position, in our opi....
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.... or intended to be located." In the case of rent paid for the space of duty free shops, the place of provision of services is thus the place where duty free shop is located, which is admittedly beyond Customs Frontiers. 14. Even in the Integrated Goods And Services Tax Act, 2017,as per Section 13(4) the place of supply of services remains the place where immovable property is located. Section 13(4) reads as under- "13(4) The place of supply of services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or camposite, by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including that of architects or interior decorators, shall be the place where the immovable property is located or intended to be located." 15. Section 66B of the Finance Act, 1994, permits levy of Service Tax only on the Services provided or agreed to be provided in the taxable territory, in tune with Article 286 of the Constitution of India. Section 66B of Finance Act, 1994 (as amended), rea....
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....aw for non-taxable services. 21. However, the Respondent has sought refund of Service Tax paid only so far as the duty free shops at the departure lounge is concerned by claiming benefit of Notification No.41/2012-ST dated 29.06.2012 for seeking rebate / refund. The lower authorities have found them eligible for such refund in the context of the said Notification. The issue was not examined in the context of refund of tax collected without authority of law. 22. We have gone through the detailed findings of the Commissioner (Appeals). Considering the payment of Service Tax on rent amount paid to Airport Authority for the duty free shops. After following due procedure, the Assistant Commissioner, sanctioned the refund of service tax paid on the rent paid for running the duty free shops situated in the departure lounge of the International airports. 23. The Commissioner (Appeals) has recorded clear finding that the entire movement and sale of articles at the duty free shops of the respondent happen under customs supervision and control and in accordance with Chapter IX of the Customs Act dealing with Warehousing of goods". The respondent files a bill of entry for warehousing ....
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....at the goods sold at the duty free shops have to be considered as exports. It is not the case of the Department that the sales are to passengers travelling on domestic flights. The Commissioner (Appeal) has also recorded that it is admitted by the department in para 11(c) of the grounds of appeal that the goods were physically taken out of India by the individual international passengers. Therefore, there is no reason to disturb the findings to deny refund to the Respondent. 24. There is no dispute on the fact that it is not possible to carry on the export sales at the Duty Free Shop at the departure terminals, without having a space there, which can only be possible by taking the duty free shops on rent from Airport Authority of India. In view of the above, the renting of airport premises at the departure module has a direct nexus with the export sale being made by the Respondent. 25. Thus, we do not find any error in the findings recorded for being satisfied with the compliance of conditions of the Notification No.41/2012-ST dated 29.06.2012. 26. We have already pointed out that the Service Tax is collected without authority of law. Such collection of tax on services whi....