Whether the exemption will be available to supplier where such supplier supplies the goods to a Duty free shops at international airports in India?

PJ/Case Law/2018-2019/3493

Case: Vasu Clothing (P.) Ltd. v. Union of India
Citation: Writ Petition No. 17999/2018
Issue: Whether the exemption will be available to supplier where such supplier supplies the goods to a Duty free shops at international airports in India?
Brief facts: The petitioner is a manufacturer and exporter of the garments in India specializing in manufacturing of high quality products for children with customer base spread across Middle East, South Africa and USA.
The petitioner now intends to supply his produce to duty free shops situated in duty free area at the international airports in India as the erstwhile excise law allowed the petitioner to remove goods for supply to such shops without any payment of duty and the current GST regime do not allow such removal (supply) without the payment of duty.
While the erstwhile excise law allowed the petitioner to remove goods duty free from his premise where the goods are to be supplied to duty free shops situated in the duty free area of the international airports in India (as such areas were considered to be the territory outside India) the current GST law do not contain any provision that differentiates or classifies such designated area as a “territory outside India”
Appellant’s contention: In the underlying case the appellant here preferred a contention that as the sale of goods is made to the duty free shops at the international airports and the same sale (removal) was exempted from payment of duty in the erstwhile laws the appellant must in the new tax regime of GST be allowed to supply goods to such shops free from any payment of duty.
Respondent’s Contention and Judgement:
The Authority Of Advance Ruling held that in light of the definition as contained under the IGST Act, 2017 a Duty Free Shop situated at the airport cannot be treated as territory out of India. The petitioner was not exporting the goods out of India. He was selling to a supplier, who was within India and the point of sale was also at Indore as the petitioner was receiving price of goods at Indore.
The petitioner cannot escape the liability to pay GST. It is true that our taxes cannot be exported but the facts remains that it was not the petitioner, who was exporting the goods or taking goods out of India. He was selling to a person, who is having Duty Free Shop (to a Duty Free Operator), which was located in India as per the definition clause as contained under the GST Act. In light of the aforesaid, there is no reason to issue writ of mandamus directing the respondents not to charge GST on the petitioner or to legislate on the subject granting exemptions as prayed by the petitioner.
Decision: Decision pronounced against the contention of applicant clarifying that the supply made to Duty free shops at the international airports in India is subjected to the GST.
Comment: The gist of this case is that the Health Care services provided by a clinical establishment within the state attract NIL rate of tax. The crux of this case is that GST is applicable on the supply made to the duty free shops situated at the International airports as the same are considered to be Taxable Territory of India and any supply made to such entities are subjected to the payment of Tax.
Prepared by: Shubhanshu Jain

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PJ/Case Law/2018-2019/3493

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