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TMI Blog2019 (5) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Act 1962, No IGST is payable either. 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. The above observations conclude that IGST is not payable on the supply either to or from the DFS located at the arrival or at departure terminal. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of these shops are governed in accordance with the provisions of Customs Act 1962. The respondent no.3 is required to obtain registration of its business under CGST Act and SGST Act and is allotted respective GSTIN numbers and owing to registration obtained under the respective Acts, the activity undertaken by the respondent no.3 also attracts the provisions of GST Act. However, the provisions of these enactments are being mis-interpreted and the DFS operated by the respondent no.3 are presently enjoying various exemptions causing severe loss of revenue to the public exchequer. 5. The contention of the petitioner is as under:- (i) The respondent no.3 is liable to pay IGST on the goods imported into the territory of India, which it is not doing. (ii) Despite the DFS operated by the respondent no.3 being in the State of Uttar Pradesh, the goods were sold to the International passengers without charging the applicable taxes under CGST and SGST Acts. The petitioner submitted that the requirement to charge applicable CGST and SGST on the sale of goods at the DFS of the respondent no.3 was prior to Amendment of GST Act i.e. up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Commercial Taxes and another ( Civil Appeal No. 2560 of 2010 ) reported in 2012 (276) FLT 433 (SCC) , 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 in the case of Aarish Altaf Tinwala. 8. Learned counsel for the respondent no.3 has further submitted that the provisions of IGST Act (i.e. Sections 5, 7 and 8) are relevant for the purpose of addressing the contentions raised in the present PIL. The supply of goods imported into the territory of India till they cross customs frontiers are considered as Inter-State Supply as per Section 7 (2) of the IGST Act which reads as follows:- 7(2) Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce 9. On a careful reading of Section 7 (2) along with Sections 2 (10), 2(4) of IGST Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Services Tax Act, 2017 on a like article on its supply in India, on the value of imported as determined under sub- Section (8). 11. Section 7 (2) read with proviso of Section 5 (1) of the IGST Act states that integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975. Further, such tax is required to be levied at the point when the duties of customs are levied on the said goods under Section 12 of the Customs Act, 1962 and at no other point. 12. The point of time when duties of customs are levied on goods imported into India under Customs Act, 1962 is only when such goods are cleared for home consumption. It is read as under:- 12(1) Except as otherwise provided in this Act or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force on goods imported into , or exported from India . 13. Hon'ble Apex Court in the matter of Kiran Spinning Mills Vs. Col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso of Section 5 (1) of the IGST Act read with Section 12 of the Customs Act 1962, No IGST is payable either. 17. 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. 18. The above observations conclude that IGST is not payable on the supply either to or from the DFS located at the arrival or at departure terminal. 19. The definition of exports of goods: in Section 2 (5) is simply taking of goods from India to a place outside India. This definition is identical to the definition in Section 2 (18) of Customs Act 1962. In the case of Collector of Customs, Calcutta Vs. Sun Industries 1988 SCR (3) 500 under the Customs Act, 1962, the issue was as to whether the goods loaded on a ship which had passed beyond the territorial waters of India, by reason of some engine trouble decided to sail back into the territorial waters of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or... Thus for claiming the benefit of refund, the supply must be a zero rated supply such as exports of goods . 22. Since the entire activity of a DFS namely, warehousing, stocking and sale/supply happens as per the provisions under Chapter IX of the Customs Act and under Customs supervision and control. The sale of goods takes place only to International passengers and on obtaining from them payment in approved currency. Every sale is covered by a sale voucher, which shall be deemed to be the Shipping Bill or Bill of Entry under Section 69 or 68 as the case may be. As a condition of the license granted to DFS under Section 58A of the Customs Act, DFS are permitted to deposit the goods at the warehouse without payment of duty on execution of a bond. As per Section 71 of the Customs Act, the goods so deposited can either be cleared from the warehouse for home consumption (u/s 68) or for export (u/s 69) or for removal to another warehouse or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent no.2 while selling the goods from its duty free shops at departure terminal hold themselves as exporters of the goods and therefore it falls under the ambit of exporter as defined in section 2 (20) of the Customs Act, 1962. Applying the definition provided in the Customs Act, in this context, the goods supplied to the duty free shops by the Indian and international manufacturers/ suppliers are 'exported goods' and on reading this definition in conjunction with the definition of exporter, it is clear that the duty free shop operator is the exporter and the supply of goods to the international passengers is an export. 8. The above policy shows that the export oriented units which undertake to export their entire quantity of goods and services, are permitted to do so by setting up retail outlets i.e. duty free shops at International Airports. Even as per the FTP of India, sales undertaken from the said duty free shops are exports and the duty free shop operator is the exporter . It is also worth to mention that COTPA itself provides for reasonable restriction wherever the legislature intended to impose such restriction. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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