No GST charges will be imposed at duty-free shops

Various court rulings with regards to Goods and Services Tax (GST) payments at duty-free outlets have resulted in a lot of confusion amongst people who shop for chocolates and perfumes from these outlets. Intending to reduce this confusion the Allahabad high court has ruled that going forward the Goods and Services Tax (GST) will not be imposed on any purchase which is made either at arrival/departure terminals.

This judgement aims to render relief to individuals who shop for chocolates, perfumes, and other commodities from the duty-free shops. The court has decided not to levy GST since these commodities do not cross the customs border. Furthermore, commuters carry these commodities as their personal belongings.

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This Allahabad high court’s ruling is similar to the one which was passed by the Karnataka high court in the case of Flemingo duty-free shop according to which purchase or sale via such outlets would be a transaction in the course of import or export.

Nevertheless, the Madhya Pradesh high court’s ruling in the case of Vasu Clothing raised complications because it held that the transactions were accountable to GST since supply to a duty-free outlet via an Indian supplier is not to a location which is out of India and hence such kind of supplies cannot be classified as exports under GST.

The Authority for Advance Ruling (AAR) had detained that the supply of commodities from duty-free outlets at the Delhi International Airport to commuters travelling abroad is accountable to GST. Nevertheless, alcohol will remain outside the GST territory.

The Allahabad HC order has been passed with relevance to public interest litigation (PIL) that the exchequer is facing revenue losses.