Sanjana B, Pune
The Supreme Court recalls its ruling that duty-free outlets at airports cannot be subjected to indirect taxes like service tax. The judgment, passed on April 10, was held on Aug.18.
A special bench of the Supreme Court with Chief Justice D Y Chandrachud, justices J B Pardiwala and Manoj Misra upheld the verdict passed last week that duty-free shops at airports are outside the range of India’s customs law. The Commissioner of Central Goods and Services Tax (CGST) and Central Excise of Mumbai East, together with Additional Solicitor General N Venkatraman, appealed this judgement. According to the judgment, duty-free shops at the arrival and departure terminals at international airports are not liable to pay service tax because they were declared to be areas beyond India’s customs frontiers.
After this judgment, Flemingo Travel Retail Limited (FTRL), a private company in charge of duty-free shops at Mumbai and Delhi international airports. In February last year, Mumbai’s Customs Excise and Service Tax Appellate Tribunal (CESTAT) allowed the FTRL’s appeal to claim a refund of service tax related to a transaction with the Mumbai International Airport Limited between Oct. 01, 2011, and Aug. 30, 2017. The excise department had filed an appeal in the Supreme Court, but their case was dismissed on April 10. The two-person bench held the view that imposing an indirect tax on duty-free Shops would be unconstitutional. They also maintained in the judgment that Duty-Free Shops would be entitled to a refund without raising any technical objection.
The Bench who gave out the latest judgment, however, agreed with the solicitor’s argument that there would have been a “breach of the principle of natural justice” had the Central Excise not been permitted a hearing in the court of law.