No GST on supply from ‘ Duty Free’ shops : Allahabad High Court

By | May 27, 2019
(Last Updated On: May 27, 2019)

The division bench of the Allahabad High Court has held that, Goods and Services Tax ( GST ) not leviable on duty free shops. The petitioner Mr. Atin Krishna submitted that due to the misinterpretation of the provisions of CGST/SGST/IGST Acts, the public exchequer is being made to suffer huge financial loss and therefore, it is necessary in public interest that this Court provides true and correct interpretation of the applicable provisions of the aforesaid enactments so as to ensure that the revenue loss to the public exchequer is forthwith prevented. Learned counsel for the respondent opposed the petition by filing reply. He submitted that supply of goods to and from the DFS is before the clearance of imported goods for home consumption/export and the supply of goods from DFS at International Airports are considered as export of goods. He relied upon the decision of Hon’ble Supreme Court rendered in the matter of M/s Hotel Ashoka (India Tourism Development Corporation Limited) Vs. Assistant Commissioner of Commercial Taxes and another ( Civil Appeal No. 2560 of 2010 ) judgement rendered by Bombay High Court in the matter of Sandeep Patil Vs. Union of India & another in Criminal Public Interest Litigation St. No.3 of 2019 and the Central Government’s order dated 31.08.2018 bearing No. 634/2018- CUS (WZ)/ASRA/Mumbai passed under Section 129 DD of the Customs Act, 1962. The division bench comprising of Justice Pankaj Kumar Jaiswal and Justice Rajnish Kumar said that, “On a careful reading of Section 7 (2) along with Sections 2 (10), 2(4) of IGST Act and Sections 2 (11) and 2 (13) of Customs Act, 1962, it is concluded that “crossing the customs frontier of India” under the IGST Act means crossing the limits of custom area which includes the area of customs port, customs airport or land customs station or a warehouse and also any area in which imported goods are ordinarily kept before clearance by customs authority. The DFS located in the custom airport, the custom warehouse are both part of the custom area as defined under Section 2 (11) of the Customs Act, 1962. The supply of imported goods to and from the DFS do not cross the customs frontier and hence these supplies will be an inter-State supply in accordance to Section 7 (2) of the IGST Act. Consequently, they cannot be an inter-State supply liable to CGST and SGST under Section 9 of the CGST Act and SGST Act”. The Court also said that, “The supply of warehoused goods by the DFS at the departure terminal is to departing International passengers i.e. the passengers travelling from India to a foreign destination. Thus, the goods supplied are never cleared for home consumption and the warehoused goods are exported by the DFS, therefore the levy Customs duty and of the IGST do not arise”. While dismissing the PIL,  the Court observed that, “It is clear that the goods sold to passengers at the International departure terminal DFS are not cleared for home consumption nor for removal to another warehouse or otherwise provided in the Customs Act, 1962 and hence the goods are cleared without payment of duty only for export under Section 69 of the Customs Act under an invoice which is also deemed to be a shipping bill. Hence the sale/supply at the International departure terminals DFS would be export of goods under Customs Law and therefore will be considered as exports of goods under GST Act, since the definition of “export” and “export of goods” under both the laws is the same”.

Refer Judgment

Court No. – 1

Case :- P.I.L. CIVIL No. – 12929 of 2019

Petitioner :- Atin Krishna

Respondent :- U.O.I.Thru Secy. Ministry Of Finance And


Counsel for Petitioner :- Atin Krishna (In Person)

Counsel for Respondent :- C.S.C.,A.S.G.,Sheeran

Mohiuddin Alavi,Shubham Tripathi

Hon’ble Pankaj Kumar Jaiswal,J.

Hon’ble Rajnish Kumar,J.

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