Vasu Clothing Private Limited VS Union of India

The petitioner, a Private Limited Company incorporated under the Companies Act, 1956, is seeking relief from paying goods and service tax (GST) by way of exemption on the goods and service supply to Duty Free Shops (DFSs) at international airports in India. The petitioner argues that following the enactment of the Central Goods and Service Tax Act, 2017 and the corresponding Rules, they are entitled to supply goods and services to Duty Free Shops without having to pay taxes. They contend that such supplies fall under a category exempt from GST. The petitioner’s registered office is located at 75, Readymade Complex, Industrial Area, Pardeshipura, Indore.

In essence, the petitioner seeks the court’s intervention to affirm their interpretation of the law, which they believe allows them to conduct transactions with Duty Free Shops without the imposition of GST. This request for relief hinges on the proper application and interpretation of the relevant legal framework surrounding GST regulations in India.

The petitioner, a Private Limited Company, is seeking relief from paying goods and service tax (GST) on supplies made to Duty Free Shops (DFSs) located at international airports in India. The petitioner argues that under the Central Goods and Service Tax Act, 2017 and its associated rules, they are entitled to supply goods and services to DFSs without tax payment. They point out that similar supplies to DFSs worldwide are exempt from taxes.

The petitioner, a manufacturer and exporter of garments in India, plans to supply goods to Duty Free Operators (DFOs), who then sell these goods in DFSs. DFOs import items like liquor, tobacco, souvenirs, eyewear, watches, fashion items, chocolates, and perfumes, among others, by filing import general manifest and Bill of Entry for warehousing with the customs department without paying import duty on the first importation, subject to certain conditions. The Bill of Entry clearly identifies the DFO as the importer, and the imported goods are marked for “sale only for Duty Free Shop / Export.”

Additionally, the petitioner notes that DFOs rent private bonded warehouses near airports and specific shops within international airport terminals designated as DFSs. Goods sold to international passengers through DFSs are exempt from duties and taxes. DFOs obtain special warehouse licenses under Section 58-A for this purpose.

In summary, the petitioner is requesting the court’s intervention to grant them relief from GST payments on supplies made to DFSs, citing provisions under the Central Goods and Service Tax Act, 2017, and the exemption granted to similar supplies globally.

The petitioner, a Private Limited Company incorporated under the Companies Act, 1956 with its registered office in Indore, seeks relief from paying goods and service tax (GST) on supplies to Duty Free Shops (DFSs) at international airports in India. The petitioner argues that under the Central Goods and Service Tax Act, 2017, it should be exempt from taxes when supplying goods and services to DFSs, similar to supplies made to DFSs worldwide which are tax-exempt.

The petitioner, engaged in manufacturing and exporting garments in India, intends to supply goods to Duty Free Operators (DFOs), who sell them through DFSs. DFOs import various products like liquor, tobacco, souvenirs, eyewear, watches, fashion items, chocolates, and perfumes without paying import duty, subject to conditions, and warehouse them in bonded warehouses. The imported goods are marked for sale only at DFSs.

DFOs, licensed under Section 58-A of the Customs Act, 1962, rent private bonded warehouses near airports and DFSs at arrival and departure terminals. Goods are sold to international passengers without duty payment. DFOs transfer goods from customs warehouses to private bonded warehouses under warehousing bonds, with customs officer supervision. Goods are then escorted to DFSs for sale, maintaining strict compliance with warehousing provisions and customs control.

The petitioner emphasizes that the entire process, from warehousing to sale at DFSs, adheres to Chapter IX of the Customs Act and customs supervision. Goods deposited can be cleared for home consumption or export under Sections 68 and 69, respectively.

The petitioner, a Private Limited Company incorporated under the Companies Act, 1956, with its registered office in Indore, has filed a petition seeking relief from paying goods and services tax (GST) on supplies to Duty Free Shops (DFSs) at international airports in India. The petitioner argues that under the Central Goods and Service Tax Act, 2017 and related rules, it should be exempt from paying taxes on such supplies, similar to exemptions granted for supplies to DFSs worldwide except in India.

The petitioner, a manufacturer and exporter of garments in India, plans to supply goods to Duty Free Operators (DFOs), who sell them in DFSs. DFOs import goods like liquor, tobacco, souvenirs, eyewear, watches, etc., without paying import duties, subject to conditions, and warehouse them in bonded warehouses. These goods are sold to international passengers without duties and taxes at DFSs in arrival and departure terminals of international airports in India.

DFOs are granted special warehouse licenses under the Customs Act, 1962, and transfer goods from customs warehouses to private bonded warehouses under customs supervision. The movement of goods from warehouses to DFSs follows warehousing provisions, and customs officers supervise the process. Goods can be cleared from the warehouse for home consumption, export, or other purposes under the Act.

The petitioner contends that sales at DFSs to international passengers are treated as exports under Section 69 of the Act. These duty-free purchases are generally paid for in approved currencies, including foreign currency, contributing valuable foreign currency reserves to the country.

Before the implementation of GST, duty-free operations in India were exempt from various taxes, including Customs Duty, Countervailing Duty (CVD), Special Additional Customs Duty (SACD), Excise Duty, VAT/Sales Tax, and OCTROI. The petitioner refers to a Supreme Court judgment in the case of M/s. Hotel Ashoka (Indian Tourism Development Corporation Limited) Vs. Assistant Commissioner of Commercial Taxes and Another, which established the principle of exemption from VAT/Sales Tax for Indian Duty Free Shops.

In summary, the petitioner seeks relief from GST on supplies to DFSs, arguing for exemptions similar to those granted in international duty-free operations and based on past exemptions in Indian duty-free operations before the implementation of GST legislation.

Download PDF:

For Reference Visit:

Read Another Case Law:

GST Case Law: