Clarification regarding reopening of assessments on account of retrospective amendment made in section 80HHC in respect of counter sale to foreign tourists in shops and emporia, etc., located in India
The issue whether sale of goods to foreigners in shops or other establishments situated in India is “export”, has been a subject-matter of considerable litigation. The Department’s view, all along, has been that such sales over the counters within India do not constitute exports and, therefore, are not eligible for the tax concession under section 80HHC. To give finality to this view and to end all judicial controversies, a clarificatory amendment has been made by inserting clause (aa) in the Explanation after section 80HHC(4A) through the Finance (No. 2) Act, 1991. Under the Explanation, “export out of India” shall not include any transaction by way of sale or otherwise, in a shop, emporium or any other establishment in India not involving clearance at any customs station, as defined in the Customs Act, 1962.
2. Since the amendment with regard to sales over the counters has retrospective operation with effect from 1st April, 1986, it would normally apply even to completed assessments. However, to ensure that the assessees are not subjected to harassment, it has been decided that past cases where assessments have already been completed would not be reopened with a view to check up whether “counter” sales have been treated as exports for purposes of relief under section 80HHC. Where, however, the records of the assessee clearly show that such sales over the counter have been given relief under section 80HHC, the Assessing Officer will have to take necessary action to rectify the mistake.
Circular : No. 624, dated 23-1-1992.