'Duty Free' shops at Delhi international airport to pay GST
International passengers buying goods at Delhi airport's 'Duty Free' shops will have to pay GST, with the Authority for Advance Ruling (AAR) saying that such outlets at the Delhi International Airport are not 'free from duties' under the Goods and Services Tax(GST) regime. The duty-free shops were earlier exempted from the levy of central sales tax (CST) and value-added tax (VAT).
The shops were exempted from CST and VAT as the sale from such shops were considered as exports and supplies were taking place beyond the "customs frontiers" of India.
The AAR has held that the supply of goods to the international passengers going abroad from "Duty Free" shops may be taking place beyond the customs frontiers of India under Integrated GST Act, however, the said shops are within the territory of India under the Central GST Act. The AAR ruling was given based on an application filed by Rod Retail Pvt Ltd.
Rod Retail Pvt Ltd runs a retail outlet at Indira Gandhi International Airport. "The said outlet is not outside India... but within the Indian territory 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'," the ruling said.
AMRG & Associates Partner Rajat Mohan said with AAR's decision on "Duty-Free" shops and they will no more be "free from duty" would make such shops uncompetitive via-a-vis those situated outside the airport. "This verdict would bring duty-free shops at par with other shops and eliminating the incentive for such shops to operate beyond the customs stations after paying plump rentals," Mohan said.
EY Partner Abhishek Jain said the AAR has interpreted the scope of export in quite a constrictive manner for outbound supplies made by duty-free shops.