In a significant turn of events, the Supreme Court of India has taken the unprecedented step of recalling its verdict from April 10, 2023, which deemed duty-free shops at international airport terminals exempt from indirect taxes like service tax. The recall comes after the apex court conceded that a vital aspect of natural justice was violated, as the government department's perspective was not adequately considered during the initial hearing.
The initial judgement in the case of ‘Commissioner of CGST and Central Excise vs. Flemingo Travel Retail Ltd’ had ruled that duty-free shops located in the arrival or departure terminals of airports were beyond the customs frontiers of India, thus not subject to indirect taxes like service tax. The decision was based on the Customs Excise and Service Tax Appellate Tribunal's (CESTAT) opinion that these shops operated within a tax-exempt international market environment.
However, upon reviewing the case in response to a plea by the Commissioner of CGST and Central Excise, the Supreme Court's Special Bench, consisting of Chief Justice D.Y. Chandrachud and Justices J.B. Pardiwala and Manoj Misra, recognized the need for a fair hearing of the government department's stance. Consequently, the Court allowed the review plea, citing a breach of natural justice and the absence of government submissions in the initial judgement.
The government department's appeal, along with 16 similar pleas, will now be revisited in a fresh hearing. This decision by the Supreme Court reflects the judiciary's commitment to upholding principles of justice, fairness, and transparency, even in complex matters of taxation.
The controversy originated with ‘M/s Flemingo Travel Retail Limited’ (FTRL), a company operating duty-free shops at the arrival and departure terminals of Mumbai and Delhi international airports. The CESTAT had previously granted FTRL's appeal for the refund of service tax in connection with transactions with Mumbai International Airport Limited.
The recalled judgement had pronounced that duty-free shops, whether situated in arrival or departure terminals, stood beyond the customs frontiers of India, safeguarding them from indirect taxation burdens.
Source: Link
Picture Source :
