TaxTMI 
TaxTMI 
2019 (5) TMI 1397
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....rated at Chaudhary Charan Singh International Airport, Lucknow (hereinafter referred to as "Airport") by respondent no.3. 3. The petitioner submitted that due to the mis-interpretation of the provisions of CGST/SGST/IGST Acts, (GST Act), the public exchequer is being made to suffer huge financial loss and therefore, it is necessary in public interest that this Court provides true and correct interpretation of the applicable provisions of the aforesaid enactments so as to ensure that the revenue loss to the public exchequer is forthwith prevented. 4. The petitioner alleged that the respondent no.3 herein, has been operating at the arrival and departure termination of Airport since 2004 and the operations of these shops are governed in accordance with the provisions of Customs Act 1962. The respondent no.3 is required to obtain registration of its business under CGST Act and SGST Act and is allotted respective GSTIN numbers and owing to registration obtained under the respective Acts, the activity undertaken by the respondent no.3 also attracts the provisions of GST Act. However, the provisions of these enactments are being mis-interpreted and the DFS operated by the respondent....
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....C 552 as well as Judgement rendered by Bombay High Court in the matter of Narang Hotels and Resorts Pvt. Ltd. Vs. Stateof Maharastra and others (2004 135 STC 289 (Bom.) 7. Learned counsel for the respondent no.3 opposed the petition by filing reply. He submitted that supply of goods to and from the DFS is before the clearance of imported goods for home consumption/export and the supply of goods from DFS at International Airports are considered as export of goods. He relied upon the decision of Hon'ble Supreme Court rendered in the matter of M/s Hotel Ashoka (India Tourism Development Corporation Limited) Vs. Assistant Commissioner of Commercial Taxes and another ( Civil Appeal No. 2560 of 2010 ) reported in 2012 (276) FLT 433 (SCC), judgement rendered by Bombay High Court in the matter of Sandeep Patil Vs. Union of India & another in Criminal Public Interest Litigation St. No.3 of 2019 and the Central Government's order dated 31.08.2018 bearing No. 634/2018- CUS (WZ)/ASRA/Mumbai passed under Section 129 DD of the Customs Act, 1962 in the case of Aarish Altaf Tinwala. 8. Learned counsel for the respondent no.3 has further submitted that the provisions of IGST Act (i.e.....
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....ied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under Section 12 of the Customs Act, 1962" (ii) Sub-Section (7) of Section 3 of the Customs Tariff Act, 1975 reads as under:- "(7) Any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent as is leviable under Section 5 of Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of imported as determined under sub- Section (8). 11. Section 7 (2) read with proviso of Section 5 (1) of the IGST Act states that integrated tax on "goods imported into India" shall be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975. Further, such tax is required to be levied "at the point" when the duties of customs are levied on the said goods under Section 12 of the Customs Act, 1962 and at no other point. 12. The point of time when duties of customs are levied on goods imported into India under Customs Act, 1962 ....
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....the customs frontier at the airport along with the goods and only then clears the same for home consumption. The passenger is therefore liable to pay the applicable duties of customs. The goods being a part of passenger's bonafide baggage are cleared for home consumption by the passenger under the Baggage Rules, 2016 and not by the DFS, hence no customs duty is payable by the DFS and therefore under proviso of Section 5 (1) of the IGST Act read with Section 12 of the Customs Act 1962, No IGST is payable either. 17. The supply of warehoused goods by the DFS at the departure terminal is to departing International passengers i.e. the passengers travelling from India to a foreign destination. Thus, the goods supplied are never cleared for home consumption and the warehoused goods are exported by the DFS, therefore the levy Customs duty and of the IGST do not arise. 18. The above observations conclude that IGST is not payable on the supply either to or from the DFS located at the arrival or at departure terminal. 19. The definition of "exports of goods: in Section 2 (5) is simply taking of goods from India to a place outside India. This definition is identical to the def....
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....namely: (a) export of goods or services or both; or ..... (3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:- (a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or..." Thus for claiming the benefit of refund, the supply must be a zero rated supply such as "exports of goods". 22. Since the entire activity of a DFS namely, warehousing, stocking and sale/supply happens as per the provisions under Chapter IX of the Customs Act and under Customs supervision and control. The sale of goods takes place only to International passengers and on obtaining from them payment in approved currency. Every sale is covered by a sale voucher, which shall be deemed to be the Shipping Bill or Bill of Entry under Section 69 or 68 as the case may be. As a condition of the license granted to DFS under Section 58A of the Customs Act, DFS are permitted to deposit the goods at the warehouse without p....
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....t of India. 27. The Bombay High Court in the case of Sandeep Patil (supra) has taken a similar position with respect to DFS which reads as under:- "6. Respondent no.2 while selling the goods from its duty free shops at departure terminal hold themselves as exporters of the goods and therefore it falls under the ambit of "exporter" as defined in section 2 (20) of the Customs Act, 1962. Applying the definition provided in the Customs Act, in this context, the goods supplied to the duty free shops by the Indian and international manufacturers/ suppliers are 'exported goods' and on reading this definition in conjunction with the definition of exporter, it is clear that the duty free shop operator is the "exporter" and the supply of goods to the international passengers is an export. 8. The above policy shows that the export oriented units which undertake to export their entire quantity of goods and services, are permitted to do so by setting up retail outlets i.e. duty free shops at International Airports. Even as per the FTP of India, sales undertaken from the said duty free shops are exports and the duty free shop operator is the exporter. It is ....