‘Duty-free shops at IGI not exempt from GST’

‘Duty-free shops at IGI not exempt from GST’

HIGHLIGHTS

  • In the earlier regime of excise and service tax prior to GST rollout on July 1, 2017, duty-free shops were exempt from the levy of central sales tax and value added tax
  • The Authority for Advance ruling was given based on an application filed by Rod Retail Pvt Ltd, which runs a retail outlet at IGI Terminal 3

NEW DELHI: International flyers buying goods from “duty-free” shops at Delhi’s IGI Airport will have to pay goods and service tax (GST), with the Authority for Advance Ruling (AAR) saying such airport outlets are not “free from duties” under the tax regime.

In the earlier regime of excise and service tax prior to GST rollout on July 1, 2017, duty-free shops were exempt from the levy of central sales tax and value added tax as sales from such shops were considered as exports and supply was taking place beyond the “customs frontiers” of India. The AAR Delhi bench in a recent ruling held the supply of goods to flyers going abroad from duty free shops may be taking place beyond the customs frontiers of India under the Integrated GST Act but the said shops are within the territory of India under the GST Act.

The Authority for Advance ruling was given based on an application filed by Rod Retail Pvt Ltd, which runs a retail outlet at IGI Terminal 3. “The said outlet is not outside India… 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,” the ruling said.

AMRG & Associates Partner Rajat Mohan said GST would make ‘dutyfree’ shops uncompetitive via-a-vis those situated outside the airport.

Source : https://timesofindia.indiatimes.com/city/delhi/duty-free-shops-at-igi-not-exempt-from-gst/articleshow/63888293.cms

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