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No GST to be levied at duty-free shops: Allahabad high court

New Delhi: In an attempt to provide relief to all those people buying perfumes, chocolates and other items from duty-free stores, the Allahabad high court ruled that GST will not be levied on purchases made at arrival or departure terminals. 

The court has held that the goods and services tax (GST) will not be levied as the goods never cross the customs border. Moreover, passengers carry these items as their personal effect. This order came in response to public interest litigation (PIL) that the exchequer is losing revenue, according to a ToI report.Skip

It may be noted that there have been multiple rulings on payment of GST at dutyfree shops which has created a sense of confusion among those buying perfumes or chocolates from these stores. 

This ruling by Allahabad high court is similar to the one by Karnataka high court where in case of Flemingo duty-free shop, it was held that sale or purchase by such stores would be a transaction in the course of export or import, as reported by ToI.

However, a ruling by the Madhya Pradesh high court in the case of Vasu Clothing complicates the matter, where it held that the transactions were liable to GST as supply to a duty-free shop by an Indian supplier is not to a place outside India and therefore such supplies do not qualify as exports under GST.

The Authority for Advance Ruling (AAR) had held that the supply of goods from duty-free shops at Delhi International Airport to passengers going abroad is liable to goods and services tax. However, alcohol is outside the ambit of GST.

The national publication quoted Harpreet Singh, partner at consulting firm KPMG as saying, “Applicability of GST on duty-free shops has been a perennial issue under the erstwhile VAT regime with multiple diverse rulings. The situation has not improved even under GST on account of diverse rulings by MP and Karnataka high courts. The new ruling seems to have rightly interpreted the provisions under the GST law as well as baggage rules to arrive at the conclusion which appears to be rational and in line with the legislative intent.”


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