2024 (2) TMI 1285 - HC - GST

Duty Free Shops (DFS) at airports and various government authorities - Refund of amount collected by respondents No.3 and 4 (AAI) on wrongful application of CGST Act, the Integrated Goods and Service Tax Act, 2017 (the IGST Act) and PGST Act - clarification by Hon ble Third Judge - Respondents No.3 and 4 (AAI) contended that the amount that has been paid by the said respondents to respondent No.1 (UOI) has to be reimbursed to respondent No.3 by the petitioner and thereafter refund may be claimed from Union of India/respondent No.1 by the petitioner in accordance with law. HELD THAT - The petitioner stopped paying the GST amount for services to respondent No.1 from November 2017. Despite the fact that respondents No.3 and 4 paid the said amount the petitioner is refusing to reimburse them causing continuous loss to the public exchequer. The petitioner was not willing to pay tax on Services on the ground that it was entitled to refund on account of supply of goods. Even though the petitioner was entitled to ITC he would still be liable to pay tax on the Services availed. The petitioner had not been paying taxes to respondents No.3 and 4 due to interim orders passed by the Court but respondents No.3 and 4 were depositing the same with the department/ authorities being the service provider. Therefore, the Hon ble Third Judge did not modify the order dated January 04, 2018, but clarified that the petitioner would be liable to pay interest on the withheld amounts of GST on Services in terms of interim order dated April 30, 2018. In the light of observations made and the interim orders dated January 04, 2018 and April 30, 2018 passed by Hon ble Third Judge and the terms of the concession agreement, it is opined that the petitioner should first pay the respondents No.3 and 4 and then claim ITC and/or subsequent refund, if any, from respondents No.1, 5 and 6. Therefore, the petitioner is bound to pay the GST on the Services provided by the respondents No.3 not only in accordance with the case laws discussed hereinabove but also due to the binding concession agreement between the petitioner and the respondents No.3 and 4 - it is directed that the petitioner will reimburse the sum of Rs. 3,83,38,993/- to the respondents No.3 and 4 within a period of four weeks from date of this order, along with interest as the order dated April 30, 2018 also makes it clear that the petitioner is liable to pay GST along with interest if it does not succeed in the writ petition. Petition disposed off.

Summary

Issues Involved:
1. Applicability of GST on Duty Free Shops (DFS).
2. Refund claim of GST paid by the petitioner.
3. Liability to pay GST on services availed from the Airport Authority.
4. Compliance with interim orders and the Concession Agreement.

Summary:

1. Applicability of GST on Duty Free Shops (DFS):
The petitioner, operating DFS at Amritsar airport, contended that no GST under CGST, IGST, or PGST Acts could be levied on their operations. The Union of India/respondent No.1 argued that any refund should be claimed from them as respondents No.3 and 4 deposited GST on behalf of the petitioner.

2. Refund Claim of GST Paid by the Petitioner:
The petitioner sought a refund of Rs. 40,71,047.79 collected by respondents No.3 and 4, arguing wrongful application of GST laws. The court noted the Hon'ble Supreme Court's decision in Civil Appeal Diary No.24366 of 2022, affirming that no indirect tax could be imposed on DFS at airports, making them entitled to refunds without technical objections, including limitation.

3. Liability to Pay GST on Services Availed from the Airport Authority:
The Hon'ble Third Judge clarified that while the petitioner was not liable to pay GST on goods, they were liable for GST on services availed from the Airport Authority. The petitioner was entitled to Input Tax Credit (ITC) on GST paid for services, which could be used for tax payment or refund claims.

4. Compliance with Interim Orders and the Concession Agreement:
Interim orders dated January 04, 2018, and April 30, 2018, restrained respondents from levying GST but required the petitioner to furnish indemnity bonds and bank guarantees. The court directed the petitioner to reimburse Rs. 3,83,38,993/- to respondents No.3 and 4 with interest at 8% per annum and comply with the Concession Agreement, which mandated paying GST on services provided by the Airport Authority. The petitioner must claim ITC and/or refunds as per legal procedures.

Final Directions:
The petitioner is directed to reimburse the GST amount with interest to respondents No.3 and 4 within four weeks and make necessary applications for ITC/refund, which respondents No.1, 5, and 6 must consider within eight weeks. The case and all connected applications are disposed of accordingly.