Duty Free Shops at Airports are Liable to Pay GST on Services Availed From Airport Authority of India | HC

Case Details: Flemingo Duty Free Shop (P.) Ltd. v. Union of India - [2024] 159 taxmann.com 653 (Punjab & Haryana)

Judiciary and Counsel Details

• • G. S. Sandhawalia & Ms Lapita Banerji, JJ.
  • V. Sridharan, Sr. Adv. Prakash Shah, Pawan Kumar Pahwa & Hrithik Chaudhary for the Appellant.
  • Sourabh Goel, Chetan Mittal, Sr. Adv. Vivek Singla & Himanshu Gupta, Advs. for the Respondent.

Facts of the Case

The petitioner was operating duty-free shops at international airports and it had entered into a concession agreement with the Airport Authority of India (AAI) to operate these shops. The agreement stipulated that the company would pay a ‘licence fee’ to AAI. It was of the opinion that it wasn’t liable to pay GST on the licence fee since it was a duty-free shop.

The department was of the view that it was liable to pay GST on the licence fees but it can claim a refund. It filed writ petition against it but the divergent views emerged in 2 Judges division bench, with one judge proposing modification to require tax payment by petitioner, while another restrained petitioner from paying GST. The matter was placed before Hon’ble Third Judge.

High Court Held

The Honorable High Court relied on the decision of Sandeep Patil v. Union of India 2020 (372) E.L.T. 794 (Bom.) and CIAL Duty Free and Retail Services Limited v. Union of India in CWP (C) No.12274 of 2020 where it was held that the operators of duty-free shops were exempt from GST on the sale of goods to passengers but liable to pay GST on the input services received.

The Court also pointed out that the concession agreement between the petitioner and AAI was clear and the petitioner was unequivocally obligated to pay GST on the services provided by AAI. Therefore, the Court directed the petitioner to reimburse AAI for the GST paid on its behalf, along with interest, as per the terms of the concession agreement. Thereafter, it can claim the ITC, and then apply for a refund of the accumulated ITC from the relevant tax authorities.

List of Cases Reviewed

• • Sandeep Patil v. Union of India 2020 (372) E.L.T. 794 (Bom.) (para 19)
  • CIAL Duty Free and Retail Services Limited v. Union of India in CWP (C) No. 12274 of 2020 decided on 22.09.2020 (para 22) followed