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TMI Blog2020 (9) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the Circular dated 29.06.2020 as has been argued by the Revenue, would also not be required to be answered by this Court, as the aforementioned circular has also been discussed in the judgment rendered by the High Court of Bombay in the case of SANDEEP PATIL, FLEMINGO TRAVEL RETAIL LIMITED ANR., VERSUS UNION OF INDIA AND OTHERS. [ 2019 (10) TMI 360 - BOMBAY HIGH COURT] - Once there is no dichotomy regarding the contents of letter and as well as the reference of circular in the judgment, then it is a fit case where same benefit is required to extend to the petitioner(s) herein as has been extended to similarly situated DFSs in the State of Karnataka as well as in the State of Maharashtra and other states referred by petitioners counsel and remained unrebutted. It is a matter of record that the petitioner(s) sell goods to the international passengers i.e. departing passengers or passengers arriving into India (arriving passengers) like cigarettes, alcohol, perfumes, chocolates and cosmetics etc. The expressions 'import' and 'export' defined under Customs Act, 1962 have been identically defined in IGST Act, 2017 - Invoices issued by DFSs at the time of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it petitions bearing Nos.12278, 12279, 12280, 12274 12317 of 2020, challenge has been laid to orders whereby prayer for refund of the Input Tax Credit (hereinafter called as 'ITC') has been rejected for the period tabulated below, though earlier granted:- W.P. (C) No.12278 of 2020 February, 2018 to April, 2018 W.P.(C) No.12279 of 2020 July, 2019 to December, 2019 W.P.(C) No.12280 of 2020 December, 2018 to June, 2019 W.P. (C) No.12274 of 2020 July, 2017 to January, 2018 W.P.(C) No.12317 of 2020 May, 2018 to November, 2018 3. In writ petition bearing W.P.(C) Nos.6850 of 2018 a declaration has been sought to the effect that the Central Goods and Service Tax Act, 2017, the Integrated Goods and Service Tax Act, 2017 and the Kerala State Goods and Service Tax Act, 2017 and the rules thereunder do not apply to the supply of goods and services effected by the petitioner in the arrival and departure Duty Free Shops (hereinafter called as 'DFSs') at Calicut International Airport in terms of the Concession Agreement dated 22.04.2016 with a further prayer of issuance of direction to the respondents not to apply the aforementioned Acts to the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales to international passengers travelling through the international terminal. Once the entire items are sold to passengers, petitioner-CIAL applies for closure of bond of Bill Of Exchange (BOE) with the Customs Authorities after adhering through all the processes and procedures as per Notifications No.68 69/2016-Customs (N.T) and Circular No.20/2016-Customs. On account of zero rated supplies, petitioner preferred applications under Section 54(3) of CGST and SGST read with Rule 89 of CGST Rules and SGST Rules, 2017 for refund of unutilized ITC, which were allowed but thereafter received show cause notices for cancellation. Petitioner has been granted licence No.1 of 2016 (Exhibit P-1) by the competent authority i.e. the Jurisdictional Commissioner of Customs to operate special warehouse to store duty free goods meant for sale at its DFSs at the airport. The goods brought in by the petitioner and sold in DFSs do not attract customs duty. Sales to international passengers are generally made against payment in foreign currency and upto the limit prescribed by the Reserve Bank of India in Indian currency. Every sale at the DFS located at departure terminal is covered by sale vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond respondent failed to consider a specific submission made by the petitioner that under the terms of the Customs Act, activity undertaken from the DFSs of petitioner qualifies as export. The act of second respondent is not only arbitrary but is also discriminatory inasmuch as identical applications for refund of unutilized ITC filed by similar operators in duty free business in the State of Karnataka, Punjab, Tamil Nadu, Goa, West Bengal and Gujarat have been processed and allowed. It is in view of the judgment referred to above, the DFSs situated at the arrival and departure lounge of international airports are concededly beyond customs frontiers. In addition to aforementioned arguments, paras 5, 6, 11 and 13 of the judgment rendered in Sandeep Patil's case (supra) have been referred to. 11. The issue in other two writ petitions pertains to non- applicability of Central Goods and Service Tax Act, 2017, the Integrated Goods and Service Tax Act, 2017 and the Kerala State Goods and Service Tax Act, 2017 and other rules framed thereunder as well as quashing of impugned order declining the refund. It is argued that the Concession Agreement dated 22.07.2016 has been entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CGST Act, a tax called the central goods and service tax is levied on all intra-State supplies of goods or services or both except on the supply of alcoholic liquor for human consumption on the value determined under Section 15 and at such rates, not exceeding 20%. 15. Section 2(79) of the CGST Act defines 'non-taxable territory' as the territory which is outside the taxable territory whereas 'taxable territory' is defined under Section 2(109). Similarly a non-taxable supply has been defined under Section 2(78), which would mean supply of goods or services or both which is not leviable to tax under this Act or under the CGST Act. Provisions of Kerala State Goods and Service Act, 2017 are in pari materia to CGST. Section 2(4) of IGST Act defines 'customs frontier of India', which would mean the limits of customs area as defined in Section 2 of the Customs Act, 1962. Respondent No.3 in view of the aforementioned enactment raised invoices for the month of July 2017 to January, 2018 (Exhibit P-3 to P-10). The petitioner sent a detailed representation dated 31.10.2017 (Exhibit P-11) requesting to withdraw the invoices being not accessible to 9% CGST and 9% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) , the procedure of payment of instances of GST to pay and claim credit was not accepted. Also on similar lines judgment of High Court of Bombay in Cipla Limited Vs. UOI 1995 (80) ELT 17 (Bom), wherein the demand of customs duty in excess of 2% on goods allowed to be re-exported in view of its findings that the petitioner before it was entitled to 98% of the duty by way of drawback was set aside. It is also submitted that as per judgment dated 07.10.2019 in Sandeep Patil (supra), supply of goods by DFSs has been treated to be an export of goods under IGST and a zero rated supply making and therefore, the petitioner is eligible to claim 100% ITC and claim its refund w.e.f. 01.07.2020 onwards as Vide order dated 21.03.2020, this Court was pleased to admit the writ petition and pass an interim order in favour of the petitioner. Accordingly w.e.f. 01.01.2018 to 30.06.2018, the petitioner had not paid GST on concession fee to respondent No.4. 20. As per understanding of the petitioner, respondent No.4 may have deposited GST on concession fee with the Government for period aforementioned and further from 01.07.2018, in view of the stay granted by this Court, factually respondent No.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as 'export' and the bills issued by DFS are treated as shipping bills, the same cannot be mutatis mutandis under the GST laws. The DFS and passengers receiving goods are located at airport within India and in view of Section 19 of the Sale of Goods Act, 1930, the outgoing passengers immediately become owners of the goods purchased from DFS. Mere nomenclature of Duty Free Shop does not entitle the petitioner to be free from entire indirect tax burden under every law. The input tax credit is limited to tax only on value of goods supplied whereas GST paid on services cannot be allowed to be given as input tax credit entitling for refund. The supply of goods is applicable to both outgoing and incoming passengers. Retail outlets established in the departure area of international airport supplying goods and service to the incoming passengers cannot be entitled for refund, in view of provisions of Rule 95-A of CGST Rules, 2017, thus, urges this Court for dismissal of the writ petitions. 25. In rebuttal, the counsel representing the petitioner(s) submitted that though objections qua non-maintainability of writ petitions due to availability of alternative remedy were raised in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined under Customs Act, 1962 have been identically defined in IGST Act, 2017. Invoices issued by DFSs at the time of sale of goods to the outgoing passengers are duly signed by both the passengers and the cashier. No doubt, it envisages a condition that the passenger will not consume the goods until he lands at the final destination outside India. In other words, the passenger shall become owner of the goods only upon reaching of final destination. The contents of invoices have already been extracted in paragraph 6 of the judgment rendered in Sandeep Patil (supra). It is a matter of record that all the goods which are sold at the DFSs are either imported or purchased from Indian market and are stored in a customs bonded warehouses and are removed from such warehouses only under the supervision of the Jurisdictional Commissioner, thus, for all intents and purposes are not sold for domestic purposes. The goods which are brought from customs warehouses do not cross customs frontiers, thus, before the goods are imported in the country, they had been sold at DFSs. 29. In my view, if the transaction of sale or purchase takes place when the goods are imported in India or they are be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led as Aarish Altaf Tinwala Vs. Union of India. 18. It is pertinent to note that we have held in Sandeep Patil Vs. Union of India Ors. (Criminal Public Interest Litigation No.14 of 2019) that sale to the departing passengers amounts to export of goods and DFS is an exporter . 31. I would not like to go in repetition of what has already been laid down in the judgment of Sandeep Patil's case (supra). However, it would be in the fitness of things to extract relevant paragraphs of the said judgment, which are as under:- 21. Section 2(5) of the IGST Act defines export to mean taking goods out of India to a place outside India . In view of the above we are satisfied that supply by the DFS of the Petitioner to the outbound passenger constitutes exports by the DFS. Consequently, in terms of section 16(1) of the IGST Act, it becomes a zero rated supply. 22. In our view, the Respondent-Authority has erroneously held that the Petitioner does not satisfy the crucial test of sending of the goods to foreign destination where they would be received as 'imports', to deny the benefits of zero rated supply. 23. During the period between 1st July 2017 and 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find sufficient merit in the submissions of the petitioner that import of goods in terms of section 2(10) of the IGST Act means bringing the goods into India from a place outside India. As per Section 7(2) of the IGST Act, goods imported into the territory of India, till such time it crosses the customs frontier of India, shall be treated to be a supply of goods in the course of inter-State trade and commerce. As per Section 2(4) of the IGST Act, the customs frontier of India means the limits of a customs area as defined in section 2 of the Customs Act. The duty free warehouse and DFS of the petitioner are only within the limits of the customs area and therefore, the goods lying therein do not cross the customs frontier and consequently, the importation will continue to be only in the state of inter-State trade and commerce in terms of Section 7(2). 28. We find sufficient merit in the submissions of the petitioner that petitioner only files bill of entry for warehousing. No liability under section 12 read with section 3(12) of the Customs Tariff Act would get triggered at all by filing bill of entry for warehousing. The customs duty and IGST is leviable only on removal of wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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