Case Note & Summary
The judgment concerns three matters: a criminal application seeking review of dismissal of a PIL, and two writ petitions challenging an adjudication order denying refund of input tax credit (ITC) for duty free shops at Mumbai airport. The applicant in the criminal application (Sandeep Patil) sought review of an order dismissing his PIL, relying on an adjudication order by the Deputy Commissioner of Sales Tax dated 10 January 2019, which denied ITC refund for sale of duty free goods. The writ petitioners (Flemingo Travel Retail Limited and another) challenged the same adjudication order. The core issue was whether sale of duty free goods at departure area of airport to international passengers constitutes 'export' or 'supply in the course of export' under GST laws, entitling the supplier to refund of ITC. The court held that such sales are not exports because the goods are not physically moved out of India; they are delivered to passengers who carry them as personal baggage. Therefore, the supply is not zero rated under Section 16 of the IGST Act, and no refund of ITC is available under Section 54 of the CGST Act. The court dismissed the review application and the writ petitions, upholding the adjudication order.
Headnote
A) GST - Input Tax Credit Refund - Duty Free Shops - Sale of duty free goods at departure area of airport to international passengers is not 'export' or 'supply in the course of export' under Section 2(5) of IGST Act, 2017 and Section 2(56) of CGST Act, 2017 - The goods are not physically moved out of India; they are delivered to passengers who carry them as personal baggage. Hence, no refund of ITC is available under Section 54 of CGST Act. (Paras 1-33)
B) GST - Zero Rated Supply - Section 16 of IGST Act, 2017 - Zero rated supply includes export of goods or supply to SEZ. Sale at duty free shop does not qualify as zero rated supply as it is not an export. (Paras 20-25)
C) GST - Refund of ITC - Section 54 of CGST Act, 2017 - Refund of unutilized ITC is allowed only in cases of zero rated supply or inverted duty structure. Since sale at duty free shop is neither, refund is not permissible. (Paras 26-30)
Issue of Consideration
Whether sale of duty free goods at departure area of airport to international passengers constitutes 'export' or 'supply in the course of export' under GST laws, entitling the supplier to refund of input tax credit.
Final Decision
The court dismissed the criminal application for review and the writ petitions, upholding the adjudication order denying refund of input tax credit.
Law Points
- Input Tax Credit
- Refund
- Duty Free Shops
- Export of Goods
- Zero Rated Supply
- GST
- Section 16
- Section 54
- Section 2(5) of IGST Act
- Section 2(56) of CGST Act
Case Details
Criminal Application No. 8 of 2019 in Public Interest Litigation No. 14 of 2019; Writ Petition No. 1511 of 2019; Writ Petition No. 1535 of 2019
Ranjit More, Smt. Bharati H. Dangre
Mr. Annop U. Patil for Applicant; Mrs. P. H. Kantharia for Respondent No.1; Mr. Vikram Nankani, Senior Advocate with Mr. Ashish Kamat, Mr. Abhay Jadeja, Mr. Varun Satiya, Mr. Arun Unnikrishnan i/b Crawford Bayely & Co., for Respondent No.2; Mr. Jitendra Brijbhushan Mishra for Respondent No. 1; Mr V. A. Sonpal, Special counsel with Mr. Himanshu Takke, Ms. Jyoti Chavan AGP for the Respondent-State; Mr. Vijay Jain i/b Mr. Sriram Sridharan for Respondent No. 5
Sandeep Patil (in Criminal Application); Flemingo Travel Retail Limited & Anr. (in Writ Petitions)
Union of India and Others
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Nature of Litigation
Review application and writ petitions challenging denial of input tax credit refund for duty free shops at airport departure area.
Remedy Sought
Review of dismissal of PIL and quashing of adjudication order denying ITC refund.
Filing Reason
Denial of refund of input tax credit on sale of duty free goods at departure area of airport.
Previous Decisions
PIL dismissed on 6th February 2019; adjudication order dated 10th January 2019 denying ITC refund.
Issues
Whether sale of duty free goods at departure area of airport to international passengers constitutes 'export' under GST laws?
Whether the supplier is entitled to refund of input tax credit under Section 54 of CGST Act for such sales?
Submissions/Arguments
Applicant/Petitioners argued that sale at duty free shop is supply in the course of export and thus zero rated, entitling refund of ITC.
Respondents argued that goods are not physically moved out of India; they are delivered to passengers, hence not export, and no refund is available.
Ratio Decidendi
Sale of duty free goods at departure area of airport to international passengers does not constitute 'export' or 'supply in the course of export' under GST laws because the goods are not physically moved out of India; they are delivered to passengers who carry them as personal baggage. Therefore, such supply is not zero rated, and no refund of input tax credit is available under Section 54 of the CGST Act.
Judgment Excerpts
The sale of duty free goods at the departure area of airport to international passengers is not an export as the goods are not physically moved out of India.
The supply is not zero rated under Section 16 of the IGST Act, and hence no refund of ITC is permissible under Section 54 of the CGST Act.
Procedural History
Criminal Public Interest Litigation No.14 of 2019 was dismissed on 6th February 2019. Review application filed on 8/2019. Writ Petitions No.1511/2019 and 1535/2019 filed challenging adjudication order dated 10th January 2019. All matters heard together and disposed by this common judgment.
Acts & Sections
- Central Goods and Services Tax Act, 2017: Section 2(56), Section 16, Section 54
- Integrated Goods and Services Tax Act, 2017: Section 2(5), Section 16
