FLEMINGO DUTYFREE SHOP PRIVATE LIMITED & ANR.

VERSUS

UNION OF INDIA & ORS M. A. T. 1739 OF 2024 WITH I. A. NO. CAN 1 OF 2024 HIGH COURT- CALCUTTA

DATED: – 29-7-2024

     Citation: 2024 Taxo.online 2409

In this Case, the petitioners operate a Duty-Free Shop at the Sardar Vallabhbhai Patel International Airport, Ahmedabad under a seven-year concession agreement beginning on February 26, 2016. Following the implementation of the GST Acts in 2017, the Airport Director (Respondent No. 4) began issuing invoices to the petitioners for GST at 18% on the concession fee. The petitioners contended that GST was not applicable to Duty-Free Shops located beyond the customs barrier and relied on various High Court interim orders and Supreme Court judgments that restrained such collections. Notably, the Punjab & Haryana High Court, Madras High Court, and Kerala High Court issued interim injunctions prohibiting GST collection on similar grounds.

The petitioners paid GST under protest for certain periods but sought relief to avoid further payments and refunds for amounts already paid, emphasizing that the supply of goods at Duty-Free Shops qualifies as zero-rated exports under GST law.

Now the issue arises, whether the collection of GST on concession fees paid by the Duty-Free Shops at the Ahmedabad International Airport, located beyond the customs barrier, is permissible under the GST Act, given the status of such supplies as zero-rated exports under IGST Act, 2017 and the constitutional intent of Article 286.

Held that: Observed that, the issue was substantially covered by prior decisions of the Bombay High Court, Kerala High Court, and Madras High Court, which held that Duty-Free Shops cater to international passengers and are deemed to operate outside the customs territory of India. Following the reasoning in the case of Sandeep Patil vs. Union of India, the Court held that the imposition of GST on the concession fee was contrary to the principles of zero-rated supply under the IGST Act.

 Directed that, for periods prior to specified dates, the petitioners were not liable to pay GST and for subsequent periods, they could claim refunds as per Rule 89 of the CGST Rules.

Emphasized that, such impositions could adversely affect foreign trade and the competitiveness of Indian Duty-Free Shops globally, thereby negating the legislative intent of GST and Article 286.

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