Atin Krishna VS Union Of India And Ors

The case, heard before the court, involves a petitioner, Sri Atin Krishna, representing themselves, and various counsels representing the Union of India (respondent no. 1), the State (respondent no. 2), and respondent no. 3. The petition is filed in the public interest, aiming to ensure the proper implementation of the Central Goods and Services Tax Act (CGST Act), Uttar Pradesh Goods and Services Tax Act (SGST Act), and Integrated Goods and Services Tax Act (IGST Act) concerning duty-free shops (DFS) operated at Chaudhary Charan Singh International Airport in Lucknow by respondent no. 3.

The petitioner asserts that there’s been a misinterpretation of the provisions of the GST Acts, resulting in substantial financial losses to the public exchequer. Therefore, they seek the court’s intervention to provide a correct interpretation of the relevant provisions of the aforementioned acts.

This summary outlines the key parties involved, the petitioner’s objective, and the underlying issue of misinterpretation of GST provisions leading to financial losses to the public exchequer.

The case revolves around a petition filed in public interest regarding the implementation of Central Goods and Services Tax Act, 2017 (CGST Act), Uttar Pradesh Goods and Services Tax Act, 2017 (SGST Act), and Integrated Goods and Services Tax Act, 2017 (IGST Act) concerning duty-free shops (DFS) operated at Chaudhary Charan Singh International Airport, Lucknow, by respondent no.3.

The petitioner, Sri Atin Krishna, appearing in person, raised concerns about the misinterpretation of the GST Acts, resulting in significant financial losses to the public exchequer. They emphasized the need for the court to provide a correct interpretation of these enactments to prevent revenue loss.

The petitioner alleged that respondent no.3 has been operating DFS at the airport since 2004, governed by the provisions of the Customs Act, 1962. Although respondent no.3 is required to register its business under CGST Act and SGST Act and is allotted respective GSTIN numbers, there is a misinterpretation of the provisions, leading to exemptions and loss of revenue.

Key contentions of the petitioner include:

1.The failure of respondent no.3 to pay IGST on imported goods.

2.Selling goods to international passengers without charging applicable taxes under CGST and SGST Acts.

3.Incorrect permission for respondent no.3 to claim refund of accumulated input.

The petitioner argued that prior to the Amendment of GST Act until January 31, 2019, it was mandatory to charge applicable CGST and SGST on goods sold at DFS.

Representatives for the Union of India, State, and respondent no.3 also participated in the hearing. Sri Savitra Vardhan Singh represented the Union of India, Sri Manish Mishra represented the State, and Sri Sameer Rohatgi represented respondent no.3.

The case underscores the importance of correct interpretation and implementation of GST Acts to prevent revenue losses and ensure compliance with tax regulations, particularly in commercial operations like duty-free shops at airports.

The petitioner argued that according to the IGST Act, a transaction should be subject to Integrated Goods and Services Tax (IGST) as soon as the goods cross India’s territorial waters. Therefore, the supply of imported goods to respondent no.3 should be taxed under Section 5 of the IGST Act. Additionally, they contended that sales made to international passengers at the arrival terminal Duty-Free Shopping (DFS) of respondent no.3 should be considered as intrastate supply of goods under Section 8(1) of the IGST Act. As per this interpretation, such sales would attract Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) under Section 9(1) of the respective CGST and SGST Acts until January 31, 2019. Furthermore, the petitioner argued that the activities conducted at the departure terminal DFS operated by respondent no.3 do not qualify as exports under the GST Act because the necessary conditions for export were not met by respondent no.3.

The petitioner argues that according to the IGST Act, a transaction becomes subject to IGST (Integrated Goods and Services Tax) as soon as the goods cross the territorial waters of India. Therefore, the supply of imported goods to respondent no.3 should be taxed under Section 5 of the IGST Act. Additionally, they contend that sales made to international passengers at the arrival terminal Duty-Free Shops (DFS) of respondent no.3 should be treated as intra-state supply, subject to applicable Central GST (CGST) and State GST (SGST) until January 31, 2019. They also assert that activities conducted at the departure terminal DFS operated by respondent no.3 do not qualify as exports under the GST Act because the necessary criteria for export are not met by respondent no.3.

However, the counsel for respondent no.3 opposes the petition, arguing that the supply of goods to and from the DFS occurs before the clearance of imported goods for home consumption or export. They contend that the supply of goods from DFS at international airports should be considered export of goods. They cite legal precedents, including a Supreme Court decision in the case of M/s Hotel Ashoka (India Tourism Development Corporation Limited) vs. Assistant Commissioner of Commercial Taxes and another, a Bombay High Court judgment in the case of Sandeep Patil vs. Union of India & another, and a Central Government order dated August 31, 2018, issued under Section 129 DD of the Customs Act, 1962, in the case of Aarish Altaf Tinwala.

The counsel for respondent no.3 further argues that provisions of the IGST Act (Sections 5, 7, and 8) are relevant to addressing the contentions raised in the PIL. They explain that according to Section 7(2) of the IGST Act, the supply of goods imported into India until they cross customs frontiers is considered inter-state supply.

The petitioner in this case argued that according to the provisions of the Integrated Goods and Services Tax (IGST) Act, any transaction involving the supply of goods should be subject to IGST as soon as the goods cross the territorial waters of India. Therefore, the supply of imported goods to respondent no.3 should be taxed under Section 5 of the IGST Act. Additionally, they contended that sales made to international passengers at the arrival terminal Duty-Free Shops (DFS) of respondent no.3 should be considered as intrastate supply of goods under Section 8(1) of the IGST Act, subject to Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) until January 31, 2019. They also argued that the activities conducted at the departure terminal DFS operated by respondent no.3 do not qualify as export of goods under the GST Act.

However, counsel for respondent no.3 opposed these arguments, stating that the supply of goods to and from DFS occurs before the clearance of imported goods for home consumption or export, and that goods supplied from DFS at international airports should be considered as exports. They cited legal precedents, including a Supreme Court decision and a Bombay High Court judgment, as well as a Central Government order, to support their position.

The counsel for respondent no.3 further argued that the provisions of the IGST Act, particularly Sections 5, 7, and 8, are pertinent to addressing the issues raised in the petition. They emphasized that according to Section 7(2) of the IGST Act, the supply of goods imported into India until they cross customs frontiers is deemed to be interstate trade or commerce. They also interpreted “crossing the customs frontier of India” to mean crossing the limits of the customs area, which includes customs ports, airports, land customs stations, or warehouses.

They asserted that DFS located in customs airports or warehouses are part of the customs area, and thus, the supply of imported goods to and from DFS does not cross customs frontiers, making them interstate supplies under Section 7(2) of the IGST Act. Therefore, such supplies are not subject to CGST and SGST under Section 9 of the CGST Act and SGST Act.

Finally, they highlighted that the timing of the transaction is crucial for the levy of integrated tax on the supply of imported goods into India, which is governed by Section 5(1) of the IGST Act, read in conjunction with the Customs Act, 1962. Section 5(1) of the IGST Act mandates the levy of GST on interstate supply of goods.

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