The Authority for Advance Ruling, Delhi has clarified that the Goods and Services Tax ( GST ) can be imposed on duty-free shops. The authority clarified that such outlets at the Delhi International Airport are not ‘free from duties’ under the Goods and Services Tax regime.
Under the old tax regime, duty-free shops were exempt from the levy of central sales tax (CST) and value-added tax (VAT) as the sale from such shops were considered as exports and supplies were taking place beyond the ‘customs frontiers’ of India.
The applicant, Rod Retail Pvt Ltd which runs a retail outlet at Terminal 3 (International Departure), Indira Gandhi International Airport, New Delhi, contended before the authority that no GST is payable on such supply taking place beyond the customs frontiers of India as the same should be considered as exports of goods under Section 2(5) of the IGST Act 2017 and should be zero-rated supply under Section 2(23) r/w Section 16(1) of the IGST Act 2017.
Rejecting the contention, the AAR held that the supply of goods to the International passengers going abroad by the applicant from their retail outlet situated in the Security Hold Area of the Terminal-3 of IGI Airport, New Delhi may be taking place beyond Customs Frontiers of India as defined under Section 2(4) of the IGST Act, 2017.
“However, the said outlet is not outside India, as claimed by the applicant but the same is within the territory of India as defined under Section 2(56) of the CGST Act, 2017 and Section 2(27) of the Customs Act, 1962 and hence the applicant is not taking goods out of India and hence their supply cannot be called “export” under Section 2(5) of the IGST Act, 2017 or “zero rated supply” under Section 2(23) and Section 16(1) of the IGST Act, 2017. Accordingly, the applicant is required to pay GST at the applicable rates,” it said.
Subscribe Taxscan Premium to view the Judgment
