GST - Outlet situated at T-3, IGI Airport is not outside India but within territory of India - applicant is not taking goods out of India, hence supply cannot be called 'export' or 'zero rated supply' : AAR
By TIOL News Service
NEW DELHI, APRIL 24, 2018: THE applicant is in the business of retail sale of sunglasses. They have one retail outlet 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.
The applicant's retail outlet is in the Security Hold Area on crossing the Customs & Immigrations. The said outlet is permitted to function beyond the Customs Area and within the Security Hold Area of the IGI Airport vide an arrangement with the Delhi International Airport Private Limited.
For the purposes of sale from the said outlet, the applicant procures supplies from the Sunglass Hut brand owner M/s Luxottica India Private Limited, Gurgaon, after payment of Integrated Tax @ 28%.
These sunglasses are further supplied by the applicant to the International passengers travelling to outside India against a valid international boarding pass.
Presently, the applicant is charging SGST/CGST on the supply invoice issued to the International passengers. However, the applicant is of the view that, its supply of goods to international passengers is a zero rated transaction, being ‘export sale' within the meaning of the same under Section 2(5) of the IGST Act.
Advance Ruling is requested by the applicant on the following -
"Whether the supply of sunglasses from the retail outlet of the applicant at Terminal 3, IGI Airport (International Departure), New Delhi, to outbound international passengers against the international boarding pass is liable to SGST under the DGST Act, 2017 and CGST under the CGST Act, 2017 or is it a zero rated "export" supply within the meaning of Section 2(23) r/w Section 2(5) of the IGST Act, 2017 ?"
The officer for the Department submitted that the applicant had paid Rs. 1,94,71,525/-as VAT during the year 2016-17; that previously, the sale of sunglasses from the said business place was not exempted under DVAT Act, and now if the same is exempted from paying GST, then there would be financial implications. And, therefore, it would be appropriate that an inspection be made of all the shops/ retail outlets/ business places located in the duty free zone of the International departure of IGI Airport, New Delhi to check whether all such retail outlets are exempted from paying GST.
After extracting the legal provisions material to the case, the Authority observed that the goods can be said to be exported only when they cross the territorial waters of India and the goods cannot be called to be exported, merely on crossing the Customs Frontiers of India.
Noting that the ratio of the apex court decision in Sun Industries - 2002-TIOL-876-SC-CUS holding that u/s 2(18) of the Customs Act, 1962, the export of goods out of India was completed when the ship had passed beyond the territorial waters of India, would squarely apply to the present case as the definition of "export" u/s 2(18) of the Customs Act, 1962 and u/s 2(5) of the IGST Act, 2017 are exactly the same, the following ruling was passed.
RULING
| "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 Authority concluded that the applicant is required to pay GST at the applicable rates.
(See 2018-TIOL-08-AAR-GST)
