Legal principle

Transactions at duty free shops located beyond the immigration counter at international airports are deemed to take place beyond the customs frontiers of India, but this benefit does not extend to shops in a domestic security hold area before immigration clearance, where sales cannot be treated as outside India and remain liable to customs duty and GST.

Court decision

The Bombay High Court (Nagpur Bench) dismissed the writ petition, holding that the Hotel Ashoka line of cases applies only to duty free shops located after the passenger crosses the immigration counter at arrival or departure halls of international airports, and not to shops at a domestic airport or Domestic Security Hold Area; no case was made out even on a prima facie basis for any directions or notice, so no exemption or refund was granted to the petitioner.

Facts

A-1 Cuisines Private Limited sought a writ of mandamus to be exempted from GST (CGST/SGST/IGST) on sales of cosmetic products, perfumes and similar goods to international passengers from a retail shop it proposed to set up at the Domestic Security Hold Area of Dr. Babasaheb Ambedkar International Airport, Nagpur, plus refund of input taxes. It sought parity with duty free shops at international airports, where goods are imported under Bill of Entry for warehousing without duty, stored in special warehouses licensed under Section 58A of the Customs Act, 1962, moved to duty free shops under Chapter IX (Sections 68, 69, 71) under customs supervision, and sold without duty to international passengers. The petitioner relied on Hotel Ashoka (SC), a CESTAT order in Flemingo Duty Free Shop, and a Central Government revisional order dated 31.8.2018 under Section 129DD in Aarish Altaf Tinwala, where goods bought from a Mumbai arrival-hall duty free shop were held dutiable after the passenger crossed the green channel without declaration. The respondents (Union of India and State of Maharashtra) resisted the claim, and the court dismissed the petition.

Key provisions

• Section 2(11), Customs Act, 1962 — Definitions
• 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 129DD, Customs Act, 1962 — Revision by Central Government
• Section 77, Customs Act, 1962 — Declaration by owner of baggage