Legal principle

Duty free shops situated beyond the immigration/customs channel at international airports are beyond the customs frontiers of India and constitute non-taxable territory, so tax collected thereon without authority in the charging provision is refundable and cannot be denied on limitation or unjust enrichment.

Court decision

The Tribunal allowed the appeals with consequential relief, holding that the refund claims were filed within the period permitted under section 11B of the Central Excise Act, 1944, that the levy was one which the law did not authorize for collection, and that the tax had been borne by the appellants; the finding of unjust enrichment was held to be beyond the sanction of law and the show cause notice.

Facts

M/s Flemingo Travel Retail Ltd (formerly DFS India Pvt Ltd) operated duty free shops in the arrival and departure terminals of Mumbai International Airport, and the airport operator (MIAL) incorporated service tax under Finance Act, 1994 in its billings for the space/rent. The appellant honoured these billings under protest, as undertaken before the Hon'ble Bombay High Court, and later filed seven refund claims for 1 October 2011 to 30 June 2017 totalling ₹57,11,16,849, following Tribunal decisions upholding its entitlement. The original authority rejected the claims principally on the bar of limitation, and the first appellate authority (Commissioner of GST & CX (Appeals-I), Mumbai) additionally sustained denial by invoking the bar of 'unjust enrichment'. The appellant challenged the order-in-appeal dated 25 September 2020 before CESTAT, Mumbai.

Key provisions

• Section 2(11), Customs Act, 1962 — Definitions
• Section 77, Customs Act, 1962 — Declaration by owner of baggage
• Section 71, Customs Act, 1962 — Goods not to be taken out of warehouse except as provided by this Act
• Section 58A, Customs Act, 1962 — Licensing of special warehouses
• Section 128A(3), Customs Act, 1962 — Procedure in appeal