Commissioner of CGST And Central Excise Mumbai East Vs Flemingo Travel Retail Ltd (Supreme Court of India)
Supreme Court dismissed the appeal filed by the Commissioner of CGST & Central Excise, Mumbai East, against a CESTAT ruling that granted a service tax refund to Flemingo Travel Retail Ltd. The case revolved around the applicability of service tax on rental charges paid by duty-free shops at Mumbai International Airport. CESTAT had earlier ruled in favor of Flemingo, citing that duty-free shops operate outside India’s customs frontiers, making the levy of service tax unlawful. The Supreme Court upheld this position, referring to past judgments, including ITDC Ltd – Hotel Ashoka and Aatish Altaf Tinwala, which established that transactions in duty-free shops occur outside India’s customs boundaries.
The court reinforced that indirect taxes cannot be imposed on duty-free shops as they function beyond Indian customs limits. It also highlighted past High Court decisions that consistently supported this view, emphasizing that service tax collected in such cases must be refunded without procedural barriers like limitation objections. While noting similar pending cases, the Supreme Court declined to link this appeal to them, instead leaving further action to the discretion of the Central Board of Indirect Taxes and Customs (CBIC). Consequently, the appeal was dismissed, reaffirming that duty-free shops are exempt from such tax levies.
