Goods purchased from Duty free shops at international airports exempt from GST: Bombay HC

In an important judgement, the Bombay High Court has ruled that goods purchased in the Duty-free shops present inside the International airport is outside the ambit of the Goods and Services Tax.

The tax authorities had gone to charge Inter state Goods and Services Tax (IGST) on goods being purchased in the duty-free area present at the departure and arrival areas of the Chhatrapati Shivaji International Airport of Mumbai.

Chattrapati Shivaji International Airport, Mumbai

In this regard, an order of the Sales Tax Authority was challenged by Flemingo Travel Retail limited. The petitioner was denied a refund of the input tax credit.

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The court found this order of the sales tax authority in violation of Article 286 of the Indian constitution which exempts exports and imports of goods and services from being liable to taxation.

The court also held that the duty-free shops in these international airports fall within the definition of “customs area” as per Section 2(11) of the Customs Act.

The court also lambasted the tax authorities for asking the duty-free shop to cough up tax on goods sold and thereby hampering their business and making them uncompetitive with their international counter parts.

The court opined that goods purchased in the departure area shall be deemed to be exports and those that are purchased at the arrival hall be imports.

The court also referred to a circular issued by the Union government which forbid the customs authorities from taxing goods purchased in these duty free shops.

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