GSTAT Allows Singapore Airlines’ Rs 45.92 Lakh GST Refund on Cancelled COVID-Era Tickets:

Singapore Airlines Ltd. is an international airline providing passenger transportation services which had collected GST on air tickets sold to passengers. During the period from October 2019 to March 2021, flight cancellations and travel restrictions arising from the COVID-19 pandemic led to a substantial increase in ticket refund requests. The airline refunded the fare, including GST, to passengers and issued corresponding credit notes.

As the refunds exceeded the airline’s sales during certain tax periods, there was insufficient outward tax liability against which the credit notes could be adjusted. Further, the GST return system did not permit the reporting of negative amounts. Consequently, the airline carried forward the unadjusted credit notes and subsequently filed eight refund applications under Section 54 of the CGST Act, 2017, claiming a total refund of Rs 45,92,528 under the category of excess payment of tax. The proper officer rejected the claims on the ground that the airline had not furnished sufficient supporting documents to establish excess payment of GST and the actual refund of the ticket amounts to passengers. The Joint Commissioner (Appeals) has upheld the rejection. 

The Tribunal noted that the airline had furnished the relevant supporting documents before both the original adjudicating authority and the first appellate authority, but these documents had not been properly appreciated. It held that the airline had provided sufficient evidence to establish that the entire fare, including GST, had been refunded and that the incidence of tax had not been passed on to another person. Accordingly, the question of unjust enrichment did not arise.

The Tribunal further relied on CBIC Circular No. 137/07/2020-GST dated April 13, 2020, which clarifies that where no output tax liability is available against which a credit note can be adjusted, a registered person may file a refund claim under the category of excess payment of tax through Form GST RFD-01. It held that the airline had correctly followed this procedure and that the rejection of the refund claims on this ground was unsustainable. With regard to input tax credit ITC, the Tribunal observed that the transactions were predominantly business-to-consumer (B2C) supplies made to individual passengers. Therefore, the question of ITC reversal by such passengers did not arise. 

The GSTAT set aside the order-in-appeal dated December 8, 2022, issued on December 12, 2022, and allowed all eight appeals filed by Singapore Airlines Ltd. The Tribunal directed the department to process the refund claims within two weeks from the date of the order and make payment of Rs 45,92,528 along with applicable interest from the respective dates of the original refund applications until the date of actual payment.