TaxTMI 
TaxTMI 
2022 (2) TMI 668
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....g 'duty free shop' in the arrival and departure terminals of Mumbai International Airport and the tax included in the billings raised by the airport operator had, for long, been the subject of litigation with tax authorities insisting that the levy under Finance Act, 1994 was payable on 'rent' charged for immovable property within coverage of 'airport service' for the period prior to 1st July 2012 and of 'service' for the period thereafter. 2. In disposing of the claim for refund, and the subsequent challenge to the disallowance thereof, on the rather featureless topography of 'consideration', as perceived by them, the lower authorities appear to have glossed over the underlying fractal geometry of the levy shaped by the definitions attending upon the charging provision of Finance Act, 1994. This is the thrust of the arguments marshalled on behalf of the appellant in continuation of their consistent critique of the show cause notice for having distorted of the contours of the claim founded on being beyond the ambit of legislative intent. The original authority restricted the findings on merit to countering of the decisions on 'taxable territory' cited in support of the claim....
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....ins unresolved, and, as undertaken before the Hon'ble High Court, subject to final outcome of the proceedings. This factual matrix has a bearing on one of the grounds on which the claims were found unacceptable by the lower authorities. 5. The business of the appellant was conducted at both the arrival and departure terminals. On the departure side, the outlet was accessible to outbound passengers after completion of all procedural formalities prior to boarding of aircraft. On the arrival side, the facility existed just before the baggage carousel beyond which is the customs channel marking the point of no return for declaring of dutiable or prohibited goods in the possession of passengers. 6. Learned Senior Counsel, Mr Vikram Nankani, drew our attention to the foundational facts pertaining to the claims filed on 21st September 2018 for the period from 1st October 2011 to 31st March 2014 and on 25th September 2018 for the period from 1st April 2014 to 30th June 2017 following the decision of the Tribunal in Commissioner of Service Tax v. Fleminigo Duty Free Shops Pvt Ltd [2018 (8) GSTL 181 (Tri-Mum)] on 28th September 2017 arising from a dispute with service tax autho....
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....service' deployed at the departure outlet; according to him, Rs. 13,79,72,476 pertained to tax on payments relatable to the departure outlet even as the remaining Rs. 8,42,13,688, out of the Rs. 22,21,86,164 claimed in three applications of 21st September 2018 for October 2011 to March 2012, April 2012 to March 2013 and April 2013 to March 2014, were payments related to the arrival outlet. He further contended that the Tribunal had, in re Flemingo Duty Free Shops Pvt Ltd, settled the issue thus '18. In the instant case, there is no dispute that the duty- free shops, whether in arrival or departure lounge, of the International Airports are beyond the customs frontiers. Thus, they are outside the taxable territory and thus in non-taxable territory. The Grounds taken in the Appeal also show that the department deems these duty free shops in foreign territory. Since, the rent is paid for the rental space in arrival or departure lounge area in non-taxable territory, the same therefore is not a taxable service. 19. Therefore, no Service Tax is chargeable at the first instance on rent for rental of Customs Bonded Warehouse (Duty Free Shop), whether it be in the....
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....ificate from chartered accountant in support of having borne the incidence of tax which was ignored by the lower authorities. 10. Learned Authorized Representative contends that the reliance placed on decisions does not come to the assistance of the appellant as DFS India Pvt Ltd is an entity separate from that of the disputant whose entitlement for refund had been upheld by the Tribunal. According to him, consequential, and particularly 'restitution', refund must flow directly from judicial resolution of a dispute of the claimant themselves and benefit accorded to Flemingo Duty Free Shops Pvt Ltd does not accrue to another entity. The inapplicability of the decision in re Flemingo Duty Free Shop Pvt Ltd, with reference to 'export' being the relevant factor that weighed with the Tribunal in a claim for refund of tax paid on procurement of 'service' deployed for exporting goods, evident from '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 abov....
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....ch conditional payments are specifically excluded from being subject to the bar of limitation in section 11B of Central Excise Act, 1944. Ultra vires of the levy was in dispute before the Hon'ble High Court of Bombay under Article 226 of the Constitution and tax compliance, with the approval of the Hon'ble High Court, rendered it tentative and conditional upon final resolution of the challenge. Section 11B of Central Excise Act, 1944 shifts the 'relevant date' for refund arising from judicial determination to pronouncement of the verdict for computation of the deadline within which claim may be preferred; there is no legal bar on filing of claim even before such judicial disposal of the dispute and the competent authority could, at best, have kept the claim pending to await the outcome of the dispute. There is no finding that the said dispute, which could, conceivably, have led to refund, had been resolved at all. There was, thus, no legal ground to reject the claim as barred by limitation of time. In the meanwhile, the leviability of the impugned activity to tax was sought to be disputed through the refund route; the appellant, not being the assessee, was excluded from appellate r....
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....te is not a deeming provision but maps the boundaries within which a tax collector may enforce obligations under the statute. Again, here we do not propose to tarry on the superimposition of 'customs area' in Customs Act, 1962 over 'taxable territory' in Finance Act, 1994 in the face of the primary submission of the appellant disputing the extent to which every transactional flow between two contracting parties can be subject to levy as 'taxable service' within the meaning of section 66 of Finance Act, 1994 and 'service' within the meaning of section 66B of Finance Act, 1994 for which we attend to the nature of the activity itself. 13. Aerodromes and harbours are, in essence, docking facilities for 'conveyances' that traverse beyond land and geographical boundaries for discharge and loading of persons and goods. Doubtlessly under the sovereign authority, including over taxation, of the State within which it lies, parliamentary will of the State may not exclude any part of its geographical limits from the application of an enacted special law. However, to the extent that is, it is not open to the executive to persuade otherwise. A clear perusal of the taxing statute, uninflue....
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....tional validity of the levy had been challenged by several petitioners including the appellant herein. At the same time, a levy for providing of 'airport service' did exist with the incorporation of (zzm) in section 65(105) of Finance Act, 1994 from 10th September 2004 providing also for non-applicability of section 65A of Finance Act, 1994 which, since 14th May 2003, afforded a mechanism for isolating the 'taxable service' in the event of overlap; impliedly, 'taxable service' rendered within the airport did not warrant segregation of activity for charging of tax. However, consequent to amendments effected in 2010 to these 'taxable services', the airport concession-holder, by communication dated 26th July 2010, intimated the appellant that tax would, with effect from 1st July 2010, be chargeable under the authority of section 65(105)(zzm) of Finance Act, 1994. Circular no. 80/10/2004/ST dated 17th September 2004 of Central Board of Excise & Customs had categorically excluded tax on rentals from the ambit of section 65(105)(zzm) of Finance Act, 1994 but that circular was withdrawn on 23rd August 2007 after section 65(105)(zzzz) was incorporated in Finance Act, 1994 to tax 'renting o....
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....r resolution of the present dispute on the scope and reach of section 66 and section 66B of Finance Act, 1994 with reference to 'taxable service' elaborated in section 65(105)(zzm) and 'service' in section 65B of Finance Act, 1944 for the periods before and after 1st July 2012. 17. 'Airport service' was taxable from 2004 onwards though specific services, enumerated under section 65 (105) of Finance Act, 1994, rendered within an airport were taxable even earlier. With this omnibus inclusion in the enumeration of taxable services, a range of activities undertaken in an airport were brought to the tax net without recourse to the nuanced identity afforded by section 65A of Finance Act, 1994; consequently, the blurring, inhering in the frontiers of intangibles such as enumerated services prior to July 2012 or 'taxable service' thereafter, did not offer a path of avoidance of this levy. It was, simultaneously, an acknowledgement of the bundling of activities that are not amenable to segregation for elective exclusion except at cost of commercial viability of airport operation. The transition to the later tax regime, bereft of nomenclature identity, subsumed the amorphous delineati....
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....13 (29) STR 257 (Tri-Del)]. In the absence of such determination, there is no legal foundation for holding, as the lower authorities have, that the levy lies. Likewise, for the period after 1st July 2012, with tax leviable on 'consideration' determined as per section 67 of Finance Act, 1994 under the authority of '66B. Charge of service tax on and after Finance Act, 2012 There shall be levied a tax (hereinafter referred to as the service tax) at the rate of ..... on the value of all services, other than those specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another.....' requiring a provider and recipient for completion of the cycle of '(44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include - an activity which constitutes merely ,- a transfer of title in goods or immoveable property, by way of sale, gift or in any other manner; or .........' and lack thereof depriving the levy of sanctity of law. Implicit in this enunciation for determination of levy are three escapes from the burden - exemption by notification, exclusion th....
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.... undertaking, that otherwise falls to the airport concession-holder, is not the outcome of an option that is attendant upon lessor-lessee relations in which renting of space is the core of the transaction; here it is the 'duty free' outlet that was offered to the appellant with space so pre-designated for the purpose. The appellant is in the business for profit from merchandising and the 'licence fee' referred to can be perceived as remuneration for being allowed to participate in running of the airport with attendant gain to the appellant from sales; that it is a fixed sum does not derogate from the nature of the remuneration. The prism of dogma and lens of commodity taxation appear to have obscured that simple perception. It can be concluded, therefore, that presumption of remuneration as taxable, in the absence of identification of provider and recipient for the period prior to 1st July 2012 and equating 'taxable territory' with geographical frontiers without identifying the person for whom the activity has been performed, is not consistent with Finance Act, 1994. Perusal of the contract and the nature of the activity inevitably lead to the conclusion of collaborative sharing of....
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.... "imported goods" means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption; (27) India - includes the territorial waters of India." 11. The Central Government however observes that the duty free shops though being physically located in Indian Territory, are specifically treated as being located outside the Customs Territory of India, duty free shops are located in the Customs Area defined under Section 2(11) and it includes any area where the imported goods or export goods are kept before clearance by Customs authorities. Goods sold by duty free shops are not duty paid goods and such goods are deposited in a customs bonded premises/warehouses, licensed under Section 58A of the Customs Act, 1962 without payment of duty. Section 71 clearly mandates that no goods shall be taken out of a warehouse except clearance for home consumption, exportation or removal to another warehouse or as otherwise provided by this Act. It is thus clear that such goods need to suffer Customs duty on being exported by duty free shops and imported by passenger in terms of Section 77 of the Customs Act, 1962. The contention....
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....rontiers of India before the transaction of sales had been taken and, therefore, in our opinion, the transactions had taken place beyond or outside the custom frontiers of India." 10. Therefore, the Central Government, in view of the above 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. 11. The Central Government has thus applied the ratio laid down by Hon'ble Supreme Court in Hotel Ashoka (supra) and correctly held that the transactions effected at the duty free shops at the arrival or departure of the I....
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....ansaction in a 'duty free' outlet within the geographical limits of the country. The Government of India did not find that plea to be sound in law owing to the circumscribing of territory for determination of dutiability and prohibition under the statute. For the functionaries of the very same Government of India to push the frontiers of 'taxable territory' sans examination of the limit articulated in the charging provision of the tax statute, contrary to the stand in re Aarish Altaf Tinwala, as an argument to charge tax is not appropriate. That which is 'sauce' (as in goose and gander) for enforcement of prohibitions by the tax authorities is also 'sauce' for the target of the tax authorities. It is, thus, amply clear that it is the constraints in the charging provision of Finance Act, 1994, in conjunction with the decisions of Government of India in re Aarish Altaf Tinwala and of Hon'ble High Court of Bombay in A1 Cuisines Pvt Ltd, as affirmed by the Hon'ble Supreme Court, that renders the confirmation of levy in the impugned order as bereft of lawful authority. The denial of claims of refunds are not sustainable in law. 23. 'Duty free' shops in airports are a global marke....