GST ON DUTY-FREE SHOP SALES: DELHI AAR RULES SUPPLY NOT EXPORT UNDER IGST ACT

GST ON DUTY-FREE SHOP SALES: DELHI AAR RULES SUPPLY NOT EXPORT UNDER IGST ACT

DELHI AUTHORITY FOR ADVANCE RULING

GOODS AND SERVICES TAX

Case Title- M/s Rod Retail Private Limited

(GST AAR DELHI)

In Application No. 01/DAAR/2017 dated 28.12.2017

Advance Ruling No. 01/DAAR/2018

Date of Judgment/Order-  27th March 2018

IMPORTANT PARAGRAPHS

Para No. 1. The applicant is in the business of retail sale of sunglasses. The applicant was registered under the Delhi Value Added Tax Act, 2004 and the Central Sales Tax Act, 1956 and now the applicant has migrated to GST regime and its present provisional GST Number is 07AADCR6468R1ZF.
Para No. 2. The applicant has several retail outlets in Delhi and one such outlet is at Terminal 3 (International Departure), Indira Gandhi International Airport, New Delhi. The present application relates to the question arising from the transaction conducted from the said outlet.

Para No. 29. Before the implementation of GST i.e. prior to 01.07.2017, according to the Article 269(1) of the Constitution of India, the tax on sale or purchase of goods in the course of inter-state trade or commerce was levied by Central Government and not by the State Government. Further, under Article 286(1) of the Constitution of India, the State Governments were not authorised to levy tax on sale or purchase of goods in the course of import into, or export of the goods out of, the territory of India. Further, Section 5(1) of Central Sales Tax Act, 1956 defined that a sale or purchase of goods shall be deemed to take place in the course of export of the goods out of territory of India, if the sale or purchase takes place after the goods have crossed the Customs Frontier of India. Since, the sale of goods from duty free shops at International Airports to passengers was taking place beyond customs frontier of India, no State Government was competent to levy VAT on such goods.

RULING

Para No. 36. It is held that the supply of goods to the International passengers going abroad by the applicant from their retail outlet situated in the Security Hold Area of the Terminal-3 of IGI Airport, New Delhi may be taking place beyond Customs Frontiers of India as defined under Section 2(4) of the IGST Act, 2017. However, the said outlet is not outside India, as claimed by the applicant but the same is within the territory of India as defined under Section 2(56) of the CGST Act, 2017 and Section 2(27) of the Customs Act, 1962 and hence the applicant is not taking goods out of India and hence their supply cannot be called “export” under Section 2(5) of the IGST Act, 2017 or “zero rated supply” under Section 2(23) and Section 16(1) of the IGST Act, 2017. Accordingly, the applicant is required to pay GST at the applicable rates.)