The Bombay High Court has held Goods and Services Tax (GST) is not applicable on the Duty-Free Shop (DFS) at Mumbai International Airport for goods sold to outgoing passengers.
The Court held that such shops are entitled to refund of input tax credit.
The petitioner, Flemingo Travel Retail Ltd, runs the duty-free shop (DFS) at Mumbai International Airport. The Petitioner in DFSs sells goods to international passengers, who are either leaving India (departing passengers) or arriving into India (arriving passengers). The goods – generally chocolates, perfumes, cosmetics, cigarettes, alcohol etc. are primarily imported or occasionally procured from SEZ units in India.
The judgment passed by the Division Bench of Justices Ranjit More and Bharati Dangre.
The Court said, “Section 2(5) of the IGST Act defines “export” to mean “taking goods out of India to a place outside India”. In view of the above we are satisfied that supply by the DFS of the Petitioner to the outbound passenger constitutes exports by the DFS. Consequently, in terms of section 16(1) of the IGST Act, it becomes a zero rated supply.
In our view, the Respondent-Authority has erroneously held that the Petitioner does not satisfy the crucial test of sending of the goods to foreign destination where they would be received as ‘imports’, to deny the benefits of zero rated supply.”