GST Applicable on Duty Free Shops : Delhi Authority For Advance Ruling

GST Applicable on Duty Free Shops : Delhi Authority For Advance Ruling :Delhi Authority For Advance Ruling hasheld that the supply of goods to the International passengers going abroad by the duty free shops will be a taxable Supply from GST point of view. Basically special tax exemption was given to duty free shops in Old tax regime.However, no such exemption has been given in the GST regime for the sale of goods by the duty-free shops. In the ruling by Delhi Authority For Advance Ruling forRod Retail (P.) Ltd., the applicant has claimed that the sale in Duty free shop being sale beyond the custom frontier of India, should be treated as an export and thus no GST should be levied on such supply. The Authority has opined that the supply of goods induty-free shops may be taking place beyond customs frontiers of India, but the outlet could not be deemed to be outside India. Thus such supplies will not be treated as exports and therefore, the applicant shall be required to pay GST at the applicable rates. Delhi Authority For Advance Ruling hasheld that : "the supply of goods to the International passengers going abroad by the duty free shops may be taking place beyond Customs Frontiers of India as defined under Section 2(4) of the IGST Act, 2017, but the said outlet is not outside India,but 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 hencethe 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 applicant is required to pay GST at the applicable rates." In the present case, as per Section 2(5) of the IGST Act 2017, export of goods takes place only when goods are taken out to a place outside India. Further, India is defined under Section 2(27) of the Customs Act, 1962 as India includes the territorial waters of India.Similarly, under CGST Act 2017, under Section 2(56), India means the territory of India including its territorial waters and the air space above its territory and territorial waters. Hence, 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. Conclusion GST Applicable on Duty Free Shops : Delhi Authority For Advance Ruling As per advance ruling byDelhi Authority For Advance Ruling it can be interpreted that GST is applicable on Duty free shops and this issue should be clarified by GST council.

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