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TMI Blog2022 (2) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant filed the claims within one year from the date on which the Tribunal interpreted the law on levy of service tax as not intended to cover the business of the appellant - there was, thus, no legal ground to reject the claim as barred by limitation of time. In the meanwhile, the leviability of the impugned activity to tax was sought to be disputed through the refund route; the appellant, not being the assessee, was excluded from appellate remedy under Finance Act, 1994 against the charging of tax and claim for refund was the only alternative under the statute. It is not controverted that appellant sells goods and is, thereby, beyond the pale of tax on service on such sales. Without the duty free specialist, the airport concession-holder would have to undertake this necessary, and cardinal, facilitation of international airports with such activity too being beyond the pale of tax on service. The goods stocked in these duty free outlets are not liable to duties at the transaction stage and it has been consistently held that exemption from duty liability in the hands of the duty free outlet flows from taxable event occurring later on the arrival side and having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent ORDER Aggrieved by the dismissal of their appeal challenging the rejection of claim for refund of service tax borne by them in relation to their transaction with Mumbai International Airport Ltd (MIAL) for the period from 1st October 2011 to 30th June 2017 as not subject to levy under Finance Act, 1994, M/s Flemingo Travel Retail Ltd (formerly known as DFS India Pvt Ltd) seeks setting aside order-in- appeal no. CKJ/GST/A-I/82-88/2020-21 dated 25th September 2020 of Commissioner of GST CX (Appeals-I), Mumbai and consequential relief amounting to ₹ 57,11,16,849 involved in the seven claims. The appellant is in the business of running duty free shop in the arrival and departure terminals of Mumbai International Airport and the tax included in the billings raised by the airport operator had, for long, been the subject of litigation with tax authorities insisting that the levy under Finance Act, 1994 was payable on rent charged for immovable property within coverage of airport service for the period prior to 1st July 2012 and of service for the period thereafter. 2. In disposing of the claim for refund, and the subsequent challenge to the disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specialists in any of those niche segments. For the nonce, this facet is parked as we turn to other aspects of the dispute. 4. The concession-holder of the airport has been in receipt of financial flow from the appellant on which tax liability under Finance Act, 1994 was also incorporated in the billings. This was not acceptable to the appellant who took recourse to constitutional remedies before the Hon ble High Court of Bombay to contest the validity of such inclusion. The minutiae of the developments there do not concern the challenge brought before us; suffice it to say that the billings were honoured in entirety, though the dispute remains unresolved, and, as undertaken before the Hon ble High Court, subject to final outcome of the proceedings. This factual matrix has a bearing on one of the grounds on which the claims were found unacceptable by the lower authorities. 5. The business of the appellant was conducted at both the arrival and departure terminals. On the departure side, the outlet was accessible to outbound passengers after completion of all procedural formalities prior to boarding of aircraft. On the arrival side, the facility existed just before the bagga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will stand disposed of in the above terms. However, there shall be no order as to costs. to suggest that the Tribunal, when presented with facts for resolving the issue of limitation, is obligated to do so even if lower authorities had not cared to ascertain their relevance. 7. Casting doubts on the application of mind in the impugned order, Mr Nankani drew our attention to the upholding of the rejection by the original authority of the entirety of the claim as pertaining to the outlet in the arrival terminal to sidestep, by incorrect premise, the earlier decision of the Tribunal which had dealt with entitlement to refund of tax on service deployed at the departure outlet; according to him, ₹ 13,79,72,476 pertained to tax on payments relatable to the departure outlet even as the remaining ₹ 8,42,13,688, out of the ₹ 22,21,86,164 claimed in three applications of 21st September 2018 for October 2011 to March 2012, April 2012 to March 2013 and April 2013 to March 2014, were payments related to the arrival outlet. He further contended that the Tribunal had, in re Flemingo Duty Free Shops Pvt Ltd, settled the issue thus 18. In the instant case, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugust 2018] as well as the affirmation of the very same principle in A-1 Cuisines Pvt Ltd v. Union of India [2019 (22) GSTL 326 (Bom)], which attained finality with dismissal of appeal of Revenue before the Hon ble Supreme Court, by the lower authorities demonstrates unwillingness to accept the legal foundations of tax levy. On the finding that unjust enrichment was an impediment to the grant of refund, it was brought to our notice that pricing of products in duty free shops is not linked to the costs but to prices charged by competitors at the several airports around the world and that, furthermore, they had furnished the prescribed certificate from chartered accountant in support of having borne the incidence of tax which was ignored by the lower authorities. 10. Learned Authorized Representative contends that the reliance placed on decisions does not come to the assistance of the appellant as DFS India Pvt Ltd is an entity separate from that of the disputant whose entitlement for refund had been upheld by the Tribunal. According to him, consequential, and particularly restitution , refund must flow directly from judicial resolution of a dispute of the claimant themselves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constraint on the assessee liable to tax, which, by default, is date of payment of tax, is similarly applicable to bearer of tax burden. The appellant filed the claims within one year from the date on which the Tribunal interpreted the law on levy of service tax as not intended to cover the business of the appellant. The sole contention of Revenue is that the impugned claims are not a direct consequence of judicial determination of eligibility of particular applications for refund. The communication from the airport concession-holder to service tax authorities that clearly declare payment of tax under protest has been placed before us; such conditional payments are specifically excluded from being subject to the bar of limitation in section 11B of Central Excise Act, 1944. Ultra vires of the levy was in dispute before the Hon ble High Court of Bombay under Article 226 of the Constitution and tax compliance, with the approval of the Hon ble High Court, rendered it tentative and conditional upon final resolution of the challenge. Section 11B of Central Excise Act, 1944 shifts the relevant date for refund arising from judicial determination to pronouncement of the verdict for compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who, for one reason or other, was not liable to terminal duties on the transaction and in the sale to inbound passengers too terminal duties are not the liability of the seller. It also does not seem to have been appreciated by the first appellate authority that a deeming provision, as a temporary suspension of conventional wisdom and existing legislative formulation of a concept or a situation for a specific purpose, is interpolated for carving out applicability of the statute even if contrary to the general formulation of the statute and that definitions do not deem but are. An express limitation on jurisdiction in a taxing statute is not a deeming provision but maps the boundaries within which a tax collector may enforce obligations under the statute. Again, here we do not propose to tarry on the superimposition of customs area in Customs Act, 1962 over taxable territory in Finance Act, 1994 in the face of the primary submission of the appellant disputing the extent to which every transactional flow between two contracting parties can be subject to levy as taxable service within the meaning of section 66 of Finance Act, 1994 and service within the meaning of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. After Mumbai International Airport Ltd (MIAL) was awarded the concession to operate the airport in 2007, the running of duty free facility on the arrival and departure side was contracted to M/s DFS India Pvt Ltd under licence agreement of 26th November 2007. Initially, the airport concession-holder charged them to service tax on the licence fee incorporated in the said agreement as consideration under the authority of section 65(105)(zzzz) of Finance Act, 1994 which, with effect from 1st June 2007, was intended to tax renting of immovable property service as defined in section 65(90a) of Finance Act, 1994; the constitutional validity of the levy had been challenged by several petitioners including the appellant herein. At the same time, a levy for providing of airport service did exist with the incorporation of (zzm) in section 65(105) of Finance Act, 1994 from 10th September 2004 providing also for non-applicability of section 65A of Finance Act, 1994 which, since 14th May 2003, afforded a mechanism for isolating the taxable service in the event of overlap; impliedly, taxable service rendered within the airport did not warrant segregation of activity for charging of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon ble High Court of Bombay in re In House Productions Ltd was invoked for excluding the time which had elapsed after payment of tax from computation of period of limitation. 16. We have rendered our finding on the inapplicability of bar of limitation on the facts of their own dispute over the taxability of the licence fee payable to the airport concession-holder without any reference to the decision in re Flemingo Duty Free Shops Pvt Ltd for determination of relevant date as defined in section 11B of Central Excise Act, 1944. We also do not consider it necessary to rely on that decision as binding precedent for resolution of the present dispute on the scope and reach of section 66 and section 66B of Finance Act, 1994 with reference to taxable service elaborated in section 65(105)(zzm) and service in section 65B of Finance Act, 1944 for the periods before and after 1st July 2012. 17. Airport service was taxable from 2004 onwards though specific services, enumerated under section 65 (105) of Finance Act, 1994, rendered within an airport were taxable even earlier. With this omnibus inclusion in the enumeration of taxable services, a range of activities undertaken i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concatenation with the applicable enumeration thereafter for applicability to the consideration envisaged by section 67 of Finance Act, 1994 for assessment under the authority of 66. Charge of service tax There shall be levied a tax (hereinafter referred to as the service tax) at the rate of .. of the value of taxable services referred to in .. of clause (105) .. was superfluous. The significance of assessment on the entirety of the taxable event which is not mere determination of consideration was highlighted by the Tribunal in Paul Merchants Ltd v. Commissioner of Central Excise, Chandigarh [2013 (29) STR 257 (Tri-Del)]. In the absence of such determination, there is no legal foundation for holding, as the lower authorities have, that the levy lies. Likewise, for the period after 1st July 2012, with tax leviable on consideration determined as per section 67 of Finance Act, 1994 under the authority of 66B. Charge of service tax on and after Finance Act, 2012 There shall be levied a tax (hereinafter referred to as the service tax) at the rate of .. on the value of all services, other than those specified in the negative list, provided or agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession-holder as an essential component in the running of the airport as a business venture. In terms of the contract between the airport concession-holder and the appellant, it is the operation on behalf of the former that is the subject of the agreement. Providing of space already earmarked by the airport concession- holder at the pre-determined location, that is disconnected from commercial considerations and in which the sole liberty accorded to the appellant is choice of goods as well as the display scheme, deprives the contractual relationship of principal-to-principal status. Allocation of space for operation of this undertaking, that otherwise falls to the airport concession-holder, is not the outcome of an option that is attendant upon lessor-lessee relations in which renting of space is the core of the transaction; here it is the duty free outlet that was offered to the appellant with space so pre-designated for the purpose. The appellant is in the business for profit from merchandising and the licence fee referred to can be perceived as remuneration for being allowed to participate in running of the airport with attendant gain to the appellant from sales; that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y confiscated by the Customs and should be released. 9. The Central Government is of the considered opinion that the contentions of the application are based on the erroneous belief and wrong interpretation of the law and settled legal positions. 10. Section 2(11), Section 2(25) and Section 2(27) of the Customs Act 1962 states as under :- Section 2 : Definitions. - In this Act unless the context otherwise requires :- (11) customs area means the area of a customs station and includes any area in which imported goods or export goods are ordinarily kept before clearance by the Customs Authorities; (25) imported goods means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption; (27) India - includes the territorial waters of India. 11. The Central Government however observes that the duty free shops though being physically located in Indian Territory, are specifically treated as being located outside the Customs Territory of India, duty free shops are located in the Customs Area defined under Section 2(11) and it includes any area where the imported goods or export good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid submission. When any transaction takes place outside the customs frontiers of India, the transaction would be said to have taken place outside India. Though the transaction might take place within India but technically looking to the provisions of Section 2(11) of the Customs Act and Article 286 of the Constitution, the said transaction would be said to have taken place outside India. In other words, it cannot be said that the goods are imported into the territory of India till the goods or the documents of title to the goods are brought into India. Admittedly, in the instant case, the goods had not been brought into the customs frontiers of India before the transaction of sales had been taken and, therefore, in our opinion, the transactions had taken place beyond or outside the custom frontiers of India. 10. Therefore, the Central Government, in view of the above holds that the transactions effected at the duty free shops at the arrival or departure of the International Airports in India might have taken place within the geographic territory of India, but for the purposes of levy of Customs Duties or any other taxes, the area of duty free shops shall be deemed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n remains unaltered in so far as service is concerned and the depiction of duty free shops in non- taxable supply construct is no less applicable to taxable territory of pre-Goods and Service Tax regime. 22. The underlying principle in re Aarish Altaf Tinwala is that the enforcement of a statute is restricted by the operational territory permitted by the statue and not the geographical extent of the State which the legislature has restricted for the purposes of any special law. In the appeal before the Government of India, the passenger sought to persuade that the location of the customs channel was not relevant to the transaction in a duty free outlet within the geographical limits of the country. The Government of India did not find that plea to be sound in law owing to the circumscribing of territory for determination of dutiability and prohibition under the statute. For the functionaries of the very same Government of India to push the frontiers of taxable territory sans examination of the limit articulated in the charging provision of the tax statute, contrary to the stand in re Aarish Altaf Tinwala, as an argument to charge tax is not appropriate. That which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etention of tax collected in the Consolidated Fund of India, and denial of benefit to claimant by recourse to bar of unjust enrichment which mandates transfer to the Fund established for a specific purpose by parliamentary sanction. The finding of applicability of unjust enrichment is, thus, not only beyond the sanction of law but is also entirely superfluous as the notice issuing authority, cognizant of deficiencies factual and cognitional in the claim, had already mapped the boundaries within which claim would be adjudicated. Submissions on the interpretation of principle of restitution by the original authority that did not render a finding on bar of unjust enrichment is too remote a crutch to substitute for the statutory mandate of section 128A(3) of Customs Act, 1962 which the first appellate, admittedly, did not resort to. 24. In view of our findings above that the claims for refund were filed within the period permitted under section 11B of Central Excise Act, 1944, relate to levy which the law did not authorize for collection and which had been borne by the appellants, appeals are allowed with consequential relief. (Order pronounced in the open court on 10/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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