Cial Duty Free And Retail Services Ltd VS Union Of India

The court has decided to address all seven writ petitions in a single judgment since they stem from the same cause of action. The petitions numbered 12278, 12279, 12280, 12274, and 12317 of 2020 specifically challenge the orders that have rejected the petitioners’ requests for a refund of the Input Tax Credit (ITC) for the periods mentioned in the respective petitions. This common judgment aims to provide a unified resolution to the grievances raised by the petitioners regarding the denial of ITC refunds.

Seven writ petitions are being resolved through a single judgment due to their common cause of action. Specifically, writ petitions numbered 12278, 12279, 12280, 12274, and 12317 of 2020 contest orders that denied requests for refunds of Input Tax Credit (ITC) for specified periods. Additionally, writ petition number W.P.(C) 6850 of 2018 seeks a declaration regarding the validity of the Central Goods and Services Tax Act, 2017, the Integrated Goods and Services Tax Act, 2017, and the Kerala State Goods and Services Tax Act.

The petitioner operates Duty Free Shops (DFSs) at Calicut International Airport under a Concession Agreement dated April 22, 2016, and seeks a declaration that the Service Tax Act, 2017, and its rules do not apply to the supply of goods and services at these DFSs. The petitioner also requests a directive to the respondents to refrain from applying the said Acts to the DFSs and to nullify Exhibits P-3 and P-10 to the extent that they impose Central Goods and Services Tax (CGST) and Integrated Goods and Services Tax (IGST) on revenue sharing as per the Concession Agreement.

The petitioner operates Duty Free Shops (DFSs) at Calicut International Airport under a Concession Agreement dated 22.04.2016 and is contesting the applicability of the Service Tax Act, 2017, and the rules thereunder to the supply of goods and services at these shops. They seek a directive to prevent the application of these Acts to their operations and request the quashing of specific exhibits related to the levy of CGST and IGST on revenue sharing as per the Concession Agreement. In W.P.(C) No.13237 of 2020, the petitioner challenges the rejection of a previously ordered refund, citing similar cases such as the order by the Hon’ble High Court of Bombay in Sandeep Patil and others Vs. Union of India and others 2019 (31) GSTL 398, where a refund of ITC for duty-free goods sold at airport departure areas was declined and GST was applied towards the minimum.

The petitioner operates Duty-Free Shops (DFS) at Calicut International Airport under a Concession Agreement dated April 22, 2016, and argues that the Service Tax Act, 2017, along with associated rules, should not apply to the supply of goods and services at these DFSs. The petitioner seeks an order directing respondents not to apply these Acts to the DFS operations and to nullify exhibits P-3 and P-10 that impose CGST and IGST on revenue sharing per the Concession Agreement. In writ petition W.P.(C) No. 13237 of 2020, the petitioner requests the annulment of orders (Exhibits P-17 and P-20) that rejected a previously ordered refund. The petitioner’s counsel referred to a precedent set by the Bombay High Court in Sandeep Patil vs. Union of India and others, 2019 (31) GSTL 398, where a similar issue regarding the refund of ITC for duty-free goods sold in airport DFSs and GST on minimum guaranteed fees was decided. The Bombay High Court ruled in favor of the assessee, referencing the Constitutional Bench of the Supreme Court’s unanimous decision in J.V. Gokal and Co. (P) Ltd. vs. The Assistant Collector of Sales Tax (Inspection) and others, AIR 1960 SC 595, and the Supreme Court judgment in Hotel Ashoka (Indian Tourism Development Corporation Ltd. vs. Assistant Commissioner of Commercial Tax and others, AIR 2012 SC 982), which held that DFS owners are not liable to pay customs duty or IGST.

The petitioner contends that the Service Tax Act, 2017, and its associated rules do not apply to the goods and services supplied by the petitioner at Duty Free Shops (DFSs) in Calicut International Airport, as per the Concession Agreement dated April 22, 2016, and seeks a direction for the respondents not to enforce these Acts on the DFS and to nullify Exhibits P-3 and P-10, which impose CGST and IGST on revenue sharing under the Concession Agreement of April 22, 2016. In W.P.(C) No.13237 of 2020, the petitioner requests the quashing of orders (Exhibits P-17 and P-20) that denied a previously approved refund. The petitioner’s counsel referenced a ruling by the Bombay High Court in Sandeep Patil and others vs. Union of India and others 2019 (31) GSTL 398, where a similar issue regarding the refund of ITC from duty-free sales at airport DFS was rejected, and GST was applied to fees for using licensed DFS premises at international airport departure or arrival areas. The cited judgment favored the assessee, referencing Supreme Court decisions in J.V. Gokal and Co. (P) Ltd. vs. The Assistant Collector of Sales Tax (Inspection) and others AIR 1960 SC 595 and Hotal Ashoka (Indian Tourism Development Corpn. Ltd. vs. Assistant Commissioner of Commercial Tax and others AIR 2012 SC 982, which ruled that owners are not liable for customs duty or IGST and quashed GST applicability under the concession agreement. It was also held that the assessee is entitled to an ITC refund by paying GST on services provided to DFSs by respondent No.4, then claiming an ITC refund by following Rule 89 of the Central Goods and Services Tax Rules, 2017.

The Service Tax Act, 2017 and its rules do not apply to the supply of goods and services by the petitioner at the arrival and departure Duty Free Shops (DFSs) at Calicut International Airport according to the Concession Agreement dated 22.04.2016. The petitioner seeks a directive to the respondents not to apply these Acts to the DFS and to annul Exhibits P-3 & P-10 regarding the levying of CGST and IGST on revenue sharing per the Concession Agreement dated 22.04.2016. In writ petition W.P.(C) No.13237 of 2020, the petitioner requests the annulment of orders (Exhibits P-17 and P-20) that rejected a previously ordered refund. The petitioners’ counsel referred to a Bombay High Court order in Sandeep Patil vs. Union of India 2019 (31) GSTL 398, which dealt with a similar issue of ITC refund from the sale of duty-free goods at the airport’s departure area and GST on fees for the use of licensed premises at the international airport. The cited judgment favored the assessee, referencing the Supreme Court decisions in J.V. Gokal and Co. (P) Ltd. vs. The Assistant Collector of Sales Tax AIR 1960 SC 595 and Hotal Ashoka vs. Assistant Commissioner of Commercial Tax AIR 2012 SC 982, which held that owners are not liable for customs duty or IGST. Show cause notices for GST under the concession agreement were quashed, and the assessee was entitled to an ITC refund following Rule 89 of the Central Goods and Services Tax Rules, 2017. Mr. Benny Thomas, counsel for CIAL, supported the writ petition’s averments, stating that DFSs run by the petitioner are licensed by the Customs Commissioner under Sections 58 and 58A of the Customs Act, 1962. The products are transferred to DFSs at CIAL’s Arrival and Departure Terminals for international passengers. After sales, the petitioner applies for the closure of the Bill Of Exchange (BOE) bond with Customs Authorities, following processes per Notifications No.68 & 69/2016-Customs (N.T) and Circular No.20/2016-Customs. Due to zero-rated supplies, the petitioner applied for refunds of unutilized ITC under Section 54(3) of CGST and SGST read with Rule 89 of CGST Rules and SGST Rules, 2017, which were initially allowed but later received show cause notices for cancellation. The petitioner was granted a licence No.1 of 2016 (Exhibit P-1) by the Customs Commissioner to operate a special warehouse for storing duty-free goods for sale at DFSs at the airport.

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