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By PTI
New Delhi: Pouring cold water over a multi-year legal effort by a duty-free operator, a special bench of Supreme Court of India today recalled an earlier order by the court freeing duty-free shops from indirect taxes such as service tax.
The Duty Free operator, Flemingo Travel Retail Ltd, has also been asked to keep in abeyance its efforts to reclaim from the government the nearly Rs 200 crore it had collected as service tax.
Duty Free shops, such as found inside airports, are typically not subjected to import and local taxes, and offer goods are low prices. This is done so that international travelers — who can buy their goods from India or outside — will be enticed to buy them in India.
In April 10, a two-judge bench of the Supreme Court had held that duty free shops at arrival and departure terminals at international airports are outside the purview of the customs law and they cannot be saddled with indirect taxes like service tax.
However, the new bench recalled the decision, pointing out that there was a breach of principle of natural justice as the government department was not accorded the hearing.
The latest decision came in a review petition filed by the Union government.
Now the appeal of the government department, along with 16 other similar pleas, will be heard together afresh.
The Customs Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, had on February 10, 2022 allowed the appeal of Flemingo Travel for claiming refund of service tax in relation to the transaction with Mumbai International Airport Limited for the period October 01, 2011 to August 30, 2017.
The government department had filed an appeal in the top court which was dismissed on April 10 by a bench of justices Krishna Murari (since retired) and Sanjay Karol.
Taking note of certain judgements and the tribunal’s order, the bench had said: “Duty Free Shops, whether in the arrival or departure terminals, being outside the customs frontiers of India, cannot be saddled with any indirect tax burden and any such levy would be unconstitutional.
“Therefore, if any tax is levied, the same cannot be retained and the Duty Free Shops would be entitled for refund of the same without raising any technical objection including that of limitation.”
Earlier, the CESTAT had held that duty free shops at international airports are a global market competing amongst themselves in a tax exempt environment, and the levy of service tax shall be bereft of the lawful authority.
It was held that such shops in international arrival or departure terminals shall be deemed to be the area beyond the customs frontiers of India.
New Delhi: Pouring cold water over a multi-year legal effort by a duty-free operator, a special bench of Supreme Court of India today recalled an earlier order by the court freeing duty-free shops from indirect taxes such as service tax.
The Duty Free operator, Flemingo Travel Retail Ltd, has also been asked to keep in abeyance its efforts to reclaim from the government the nearly Rs 200 crore it had collected as service tax.googletag.cmd.push(function() {googletag.display(‘div-gpt-ad-8052921-2’); });
Duty Free shops, such as found inside airports, are typically not subjected to import and local taxes, and offer goods are low prices. This is done so that international travelers — who can buy their goods from India or outside — will be enticed to buy them in India.
In April 10, a two-judge bench of the Supreme Court had held that duty free shops at arrival and departure terminals at international airports are outside the purview of the customs law and they cannot be saddled with indirect taxes like service tax.
However, the new bench recalled the decision, pointing out that there was a breach of principle of natural justice as the government department was not accorded the hearing.
The latest decision came in a review petition filed by the Union government.
Now the appeal of the government department, along with 16 other similar pleas, will be heard together afresh.
The Customs Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, had on February 10, 2022 allowed the appeal of Flemingo Travel for claiming refund of service tax in relation to the transaction with Mumbai International Airport Limited for the period October 01, 2011 to August 30, 2017.
The government department had filed an appeal in the top court which was dismissed on April 10 by a bench of justices Krishna Murari (since retired) and Sanjay Karol.
Taking note of certain judgements and the tribunal’s order, the bench had said: “Duty Free Shops, whether in the arrival or departure terminals, being outside the customs frontiers of India, cannot be saddled with any indirect tax burden and any such levy would be unconstitutional.
“Therefore, if any tax is levied, the same cannot be retained and the Duty Free Shops would be entitled for refund of the same without raising any technical objection including that of limitation.”
Earlier, the CESTAT had held that duty free shops at international airports are a global market competing amongst themselves in a tax exempt environment, and the levy of service tax shall be bereft of the lawful authority.
It was held that such shops in international arrival or departure terminals shall be deemed to be the area beyond the customs frontiers of India.
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