Case : Flemingo Dutyfree Shop Private Limited & Anr. vs. Union of India & Ors.

Facts of the Case:?

1. Parties Involved:?

• Petitioners: Flemingo Dutyfree Shop Private Limited & Another.?

• Respondents: Union of India, Airport Authority of India, and the Government of Gujarat.?

2. Background:?

• The petitioners operate a duty-free shop at the Arrival and Departure Terminals of Sardar Vallabhbhai Patel International Airport, Ahmedabad, under a concession agreement with the Airport Authority of India (AAI).?

• After the implementation of the Central Goods and Services Tax (CGST) Act, 2017, and the Gujarat Goods and Services Tax (SGST) Act, 2017, the AAI started raising invoices for the license fees, including GST at 18% on the concession fees paid by the petitioners.?

• The petitioners contested that GST should not be levied on the license fees as the duty-free shops are located beyond the customs barrier, meaning the goods sold should be free of local taxes under international law.?

3. Previous Legal Proceedings:?

• Various High Courts (Punjab & Haryana, Madras, and Kerala) granted interim relief to duty-free shop operators, restraining the AAI from collecting GST on such license fees.?

• The Supreme Court dismissed the appeal filed by the AAI against the interim orders, allowing the interim protection against GST recovery to continue.?

Issue:?

• Primary Legal Issue:?

• Whether the petitioners are liable to pay CGST and SGST on the concession fees for operating duty-free shops located beyond the customs barrier at an international airport.?

Ruling:?

1. High Court Proceedings:?

• The Gujarat High Court allowed the petitioners to amend their petition to focus on the reliefs sought due to subsequent developments, which included not insisting on the deposit of CGST and SGST by the AAI for a specific period and permitting the petitioners to reimburse the taxes paid earlier under protest.?

• The Court also took into consideration previous rulings from other High Courts and the Supreme Court's decision to not interfere with those interim orders.?

2. Legal Precedents Considered:?

• The Court referred to similar cases from other High Courts (Bombay, Punjab & Haryana, Madras) that provided interim relief to duty-free shop operators, restraining the imposition of GST on concession fees.?

• The Bombay High Court's decision in Sandeep Patil vs. Union of India was particularly noted, where it was ruled that subjecting duty-free shops to local taxes would negate the purpose of tax-free goods, affect foreign trade, and violate Article 286 of the Constitution of India.?

Conclusion:

The Gujarat High Court provided interim relief to the petitioners by preventing the respondents from recovering GST on the concession fees paid for operating the duty-free shops. The Court also allowed for the petitioners to seek a refund for any GST paid under protest and aligned its ruling with the legal precedents set by other High Courts.?