Supply of Goods to Outbound International Traveller fall under ‘Supply’, attracts GST: AAAR [Read Order]

The Delhi Appellate Authority for Advance Ruling(AAAR) has held that the supply of goods to outbound international travellers falls under ‘supply’ which attracts GST and upholds the order of  Delhi AAR.

The applicant M/S Rod Retail Private Limited was supplying ‘sunglass hut’ to international outbound passengers from the duty-free shop (retail outlet) located in the security hold area of IGI Airport, Delhi, security hold area is located beyond the customs area and was in 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.

The appellant submitted that. the Ld. Authority had not considered the judicial legacy of the term “Customs Frontiers of India” which is very vital for deciding the issue. That, simply put the definition of ‘export’ under Section 2(5) of the IGST Act defines a procedure for export and which is taking goods out of India to a place outside India.

The location of the appellant’s shop was in the Security Hold Area (SHA) as defined under s2(56) of the CGST Act, 2017 read with s2 (27) of the Customs Act, 1962. When the shop of the appellant was located in the SHA, the same as in ‘India’. It was observed that as the transactions of the appellant are taking place in the SHA, which falls well within the definition of ‘India, then the sale transactions of the appellant cannot be equated to the ‘export of goods’ under s2(5) of the IGST Act, 2017 read with s2(19) of the Customs Act, 1962.

Section 15 of the IGST Act, 2017 applies to tourists leaving India and any supply of goods taken out of India by him shall be refunded in the manner prescribed and the arguments of the appellant that they should be treated on par with Duty-Free Shops (DFS) was not sustained.

Smt. Mallika Arya, Member(Centre) and Shri Ankur Garg, Member(State) held that “transactions of supply of goods to outbound international travellers fall within the definition of “taxable territory” and when to read in conjunction with section 7 of the CGST Act, 2017 forms “supply” and attracts the applicable GST on the date of supply of the goods.”

The Bench found no infirmity in the ruling of Delhi AAR and upheld the same. Sh. Ashok K. Bhardwaj, Advocate & Sh. Manish Hirani, Advocate appeared for the appellant.

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