The Hon’ble High Court of Madras vide its order dated 25.04.2023 in the matter of Plus Max Duty Free (Madurai) Pvt. Ltd. Vs. Principal Chief Commissioner of GST & Central Excise & Others in W.P.(MD) Nos.9591, 9592 and 9593 of 2023 And W.M.P.(MD) No.8534 of 2023, allowed the writ petition filed by the Assessee seeking declaration that no GST would be payable on the amount paid by the assessee to the Airport Authority of India under the License Agreement.  It was also prayed to direct the Authorities to refund the amount already collected in this regard and to refrain from collecting any GST levied and collected on the amount paid by the assessee to Airport Authority of India under the License Agreement for lease of the premises (Duty Free Shops).

The Fact of the case are that the Petitioner is running duty free shops in various Airports across the country.  The Petitioner is a subsidiary of a Malaysian Company which has a long experience in running shops throughout the world.  The Petitioner had taken on lease the premises within the precincts of the Airport Authority of India under an agreement dated 05.04.2017, which states ‘That the licence fee of Rs.685 per 1020 per sqm per month for 28 sqm and Rs.1020 per sqm per month for 31.25 sqm w.e.f. 01.04.2017 plus 10% Conservancy Charges plus 15% Service Tax per month for the total allotted area of 59.25 sqm shall be payable in advance on or before 20th day of each month. 10% annual cumulative escalation from 1st April every year is applicable’

Petitioner Submissions: –

• It was submitted on the behalf of the petitioner that originally, they were paying service tax at 15% per month for the services being rendered by Airport Authority of India being under a bonafide and erroneous belief the licence fee, in the nature of rental, was subject to service taxes under Section 65(90a) read with Section 65(105) (zzzz) of the Finance Act, 1994.
• However, after the execution of the agreement, the Central Excise and Service Tax Appellate Tribunal had passed an order on 28.09.2017 in the matter of Commissioner of Service Tax – VII Vs. Flemingo Duty Free Shop Pvt. Ltd., [2018 (8) GSTL 181], wherein the Tribunal held that no service tax can be levied on the Duty Free Shops and the basis for the conclusion was that the shop was situated beyond the customs frontier and was outside India.
• Therefore, since the very levy itself was without jurisdiction, the petitioner requested refund of service tax. Meanwhile, in July, 2017, the Tamil Nadu Goods and Service Tax Act came into force. And, the GST Department took a view contrary to the view of the Tribunal and stated that the sale had taken place within the Duty Free Shops is an interstate supply, which is liable to IGST.

Held: –

• The Hon’ble Court after considering the submissions made and facts of the case, found that it has been brought to our notice that that the issue has been set at rest and is no longer res integra, in the light of the judgment of the Hon’ble Supreme Court in Commissioner of CGST and Central Excise Vs. Flemingo Travel Retail Ltd. [Civil Appeal Diary No.24336/2022, dated 10.04.2022], wherein the Hon’ble Supreme Court has observed ‘We have considered the above orders of the Tribunal, Central Government, High Courts and this court. Keeping in view the aforesaid judgments and Article 286 of the Constitution of India, we are also of the opinion that Duty Free Shops, whether in the arrival or departure terminals, being outside the customs frontiers of India, cannot be saddled with any indirect tax burden and any such levy would be unconstitutional. Therefore, if any tax is levied, the same cannot be retained and the Duty Free Shops would be entitled for refund of the same without raising any technical objection including that of limitation.’

With the above, the Hon’ble Court allowed the writ petitions as prayed for by the Petitioner.