Duty-free shops to charge GST

New Delhi: Passengers buying goods at the Delhi airport’s duty-free shops will now have to pay more.

According to Authority for Advance Ruling, the outlets will now have to sell items after charging Goods and Service Tax (GST).

Outlets selling duty-free ware at the Indira Gandhi International (IGI) Airport are now no longer free from duties under the new indirect tax regime.

In the earlier regime excise and service tax prior to the GST roll out on July 1, 2017, the duty-free shops were exempt from the levy of Central sales tax and value added tax (VAT) as sale from such shops were considered exports and supplies took place beyond the ‘customs frontiers’ of India.

The New Delhi bench of the AAR in a recent ruling has held that the sale of goods from duty free shops to passengers going abroad will take place beyond the customs frontiers of India under Integrated GST Act, but the said shops are within the territory of India a d hence come under the Central GST Act.

The ruling was in response to an application filed by Rod Retail Private Ltd. which runs a retail outlet at Terminal 3, New Delhi.

“Since the said outlets are not outside India, but are within the territory of the country as defined under Section 2(56) of the CGST Act,2017 and Section 2(27) of the Customs Act, 1962, hence the applicant is not allowed to take goods out of the country and hence their supply cannot be called “exports” under Section 2(5) of the IGST Act, 2017, or zero rated supply under Section 2(23) and Section 16(1) of the IGST Act, 2017.”