Supreme Court of India today recalled an earlier order by the court freeing duty-free shops from indirect taxes such as service tax.
The Commissioner of CGST and Central Excise seeks a review of a judgment dated 10 April 2023 in Civil Appeal No 2753 of 2023.
The appeal asose from an order dated 10 February 2022 of the Customs, Excise and Service Tax Appellate Tribunal1 at Mumbai. The CESTAT allowed an appeal instituted by the respondent for a refund of service tax in relation to a rental transaction with the Mumbai International Airport Limited for the period 1 October 2011 to 30 June 201
The respondent/assessee, Flemingo Travel Retail Ltd. was engaged in the business of conducting duty free shops at the arrival and departure terminals at the international airports at Mumbai and Delhi. The respondent filed an application claiming a refund of service tax paid in respect of the charges levied by Mumbai International Airport for the period in question on the basis of a notification2 dated 29 June 2012 of the Union government in the Ministry of Finance.
The adjudicating authority rejected the refund claimed on the ground that the payment of service tax on renting of immovable property of the duty free shops was not liable to be refunded in terms of the provisions of the Finance Act 1994. The order was affirmed by the Commissioner (Appeals).
In appeal, the CESTAT came to the conclusion that the duty free shops situated at international airports constitute a global market competing in a tax exempt environment and the levy of service tax was bereft of lawful authority.
The Union Government has sought to submit that the position as it obtains in relation to goods is distinct from the applicable statutory regime in respect of services. Moreover, it has been stated in the memo of appeal that sixteen appeals involving a similar issue are pending before this Court arising from orders dated 28 September 2017 and 26 October 2018 of the CESTAT at its West Zonal Bench in Mumbai. Hence, it is urged that all the appeals ought to have been set down for hearing together. A request for tagging this appeal with the appeals pending in this Court was made.
In April 10, a two-judge bench of the Supreme Court had held that duty free shops at arrival and departure terminals at international airports are outside the purview of the customs law and they cannot be saddled with indirect taxes like service tax.
However, the new bench recalled the decision, pointing out that there was a “breach of principle of natural justice” as the government department was not accorded the hearing.
The latest decision came in a review petition filed by the Union government.
Case Title: Commissioner of CGST and Central Excise Mumbai East Versus Flemingo Travel Retail Ltd