TMI Blog2017 (10) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... mittedly is beyond customs barriers in non-taxable territory. In the case of rent paid for the space of duty free shops, the place of provision of services is thus the place where duty free shop is located, which is admittedly beyond Customs Frontiers - Even in the Integrated Goods And Services Tax Act, 2017,as per Section 13(4) the place of supply of services remains the place where immovable property is located. There is no dispute that the duty-free shops, whether in arrival or departure lounge, of the International Airports are beyond the customs frontiers. Thus, they are outside the taxable territory and thus in non-taxable territory. The Grounds taken in the Appeal also show that the department deems these duty free shops in foreign territory. Since, the rent is paid for the rental space in arrival or departure lounge area in non-taxable territory, the same therefore is not a taxable service - no Service Tax is chargeable at the first instance on rent for rental of Customs Bonded Warehouse (Duty Free Shop), whether it be in the arrival lounge or in the departure lounge. The levy of Service Tax paid by the Respondent is therefore not authorised by law in view of provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee shops situated in the departure lounge of various airports. 4. The Assistant Commissioner sanctioned refund of the Service Tax on such rent paid after having satisfied about the fulfilment of all the conditions prescribed in the said notification, and thus Orders-in-Original were passed in favour of the Respondent herein. 5. All the Orders-in-Original passed by the A.C., Service Tax-VII, Mumbai were examined under section 84 of the Finance Act, 1994 and separate appeals were filed by the Department before the Commissioner (Appeals) on the following grounds, as quoted in Order-in-Appeal- The Refund sanctioning authority has erred 'in interpreting the Standing Order No. 03/2008 dated 3.3.2008 issued under F. No. Air Cus/67-01/2008 by the Commissioner of Custom Mumbai, in as much as the said Standing Order pertains to instructions on sale of non-duty paid goods by Duty Free shops (DFS) to only international passengers. The Refund sanctioning authority erred in interpreting the same to mean that such sale will tantamount to export. The Refund sanctioning authority has, failed to appreciate the definition of export as given under Section 2(18) of the Customs A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-duty paid goods, which has been warehoused and has not been imported into India, to international passengers while still in the Indian Territory. By no stretch of imagination, the same can be considered as physical export of goods. It is only the individual passengers who would take the goods outside India and not the Duty Free Shop. As per Notification No. 41/2012-ST dated 29.6.12, rebate is admissible for taxable services used for export of the goods. Export is defined under Section 2 (18) of the Customs Act, 1962, wherein export means taking out of India to a place outside India. In this case, the goods in 'question are warehoused goods which have not crossed customs barrier either for import or for export (Section 68 and Section 69 of the Customs Act, 1962). The Refund Sanctioning Authority has not appreciated the fact that the impugned goods are not manufactured in India. They are imported, warehoused and finally sold in departure lounge of airports. Hence, the sale of duty free goods in departure lounge does not satisfy the definition of exports. Assuming for the sake of discussion but not accepting the fact that the goods sold to individual passenger in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20) of the Customs Act; the goods were brought from foreign countries into India and warehoused as imported goods in terms of Chapter IX of the Customs Act, hence the same shall have to be treated as imported goods under Customs Act; the renting of airport premises at the departure module has a direct nexus with the export sale being made by the respondent as it is not possible to carry on the export sales at the Duty Free Shop at the departure terminals, without taking the duty free shops on rent from the Airport Authority of India; there is no application of doctrine of unjust enrichment in case of export of goods. 7. Chief Commissioner of Service Tax reviewed these Orders-in-Appeal under Section 86 (2A) of the Finance Act, 1994 and directed filing of these Appeals against such Orders-in-Appeal passed by the Commissioner (Appeals). 8. In these Appeals, the following Grounds are raised by the Department- 2. On examination of the Order-in-Appeal No.0-I-A No. MUM-SVTAX-002-APP- 143 to 146-16-17 dt. 24.05.2016 (received in Service Tax-V11 Commissionerate on 30.05.2016) passed by the Commissioner (Appeals), Service Tax-II, Mumbai, in respect of M/s Fle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat they would have loaded their input costs on the sale price of the goods, which is a common business practice. No evidence has been discussed about the same by the Learned Commissioner (Appeals) to the effect that such cost of input service tax were not loaded on to the sale price of the goods. Thus, if the input service tax etc. is already a part of sale price of the goods, further refund of the same to the claimant may result in unjust enrichment. 2.3 Argument put forth by the Learned Commissioner (Appeals) at para-13 of his order reads:- It is observed that in the case of Hotel Ashoka, the question before the Hon'ble Supreme Court was whether sale of goods at the duty free shops at the international airport are liable to sales tax /Vat under the Karnataka value added Tax Act. The Hon'ble Supreme Court found that the goods kept in the bonded warehouse had not crossed the customs frontier of India, since they were not brought into India after clearance from Customs. Therefore, it was held that before the goods were imported into country they had been sold at the duty free shops and hence no sales tax was leviable, The Court observed as follows:- 18. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent as a space outside India. The said judgment was rendered by the Hon ble Supreme Court after taking into consideration Article 286 of the Constitution of India, which reads as under- 286. Restrictions as to imposition of tax on the sale or purchase of goods.-(1) No law of a State shall impose, or authorise the imposition of, a tax on the supply of goods or of services or both, where such supply takes place- (a) outside the State; or (b) in the course of the import of the goods or services or both into, or export of the goods or services or both out of, the territory of India. (2) Parliament may by law formulate principles for determining when a supply of goods or of services or both in any of the ways mentioned in clause (1) 10. In view of the above the following issues arise for our consideration- (a) Whether the levy of Service Tax paid by the Respondent is authorised by law in view of provisions of Finance Act, 1994 read with Article 286 of the Constitution of India (b) Whether the sales of goods at duty free shops to International passengers is exports by the duty-free shops for the purpose of Notification No.41/2012-ST dated 29.06.2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction of sale or purchase takes place in the course of import of goods into or export of the goods out of the territory of India. Thus, if any transaction of sale or purchase takes place when the goods are being imported in India or they are being exported from India, no State can impose any tax thereon. 23. Looking to the aforestated legal position, it cannot be disputed that the goods sold at the duty free shops, owned by the appellant, would be said to have been sold before the goods crossed the customs frontiers of India, as it is not in dispute that the duty free shops of the appellant situated at the International Airport of Bengaluru are beyond the customs frontiers of India i.e. they are not within the customs frontiers of India. 24. If this is the factual and legal position, in our opinion, looking to the provisions of Article 286 of the Constitution, the State of Karnataka has no right to tax any such transaction which takes place at the duty free shops owned by the appellant which are not within the customs frontiers of India. 30. They again submitted that in the course of import means the transaction ought to have taken place beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here immovable property is located. Section 13(4) reads as under- 13(4) The place of supply of services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or camposite, by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including that of architects or interior decorators, shall be the place where the immovable property is located or intended to be located. 15. Section 66B of the Finance Act, 1994, permits levy of Service Tax only on the Services provided or agreed to be provided in the taxable territory, in tune with Article 286 of the Constitution of India. Section 66B of Finance Act, 1994 (as amended), reads as under- 66-B. Charge of service tax on and after Finance Act, 2012. There shall be levied a tax (hereinafter referred to as the service tax) at the rate of fourteen per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said Notification. The issue was not examined in the context of refund of tax collected without authority of law. 22. We have gone through the detailed findings of the Commissioner (Appeals). Considering the payment of Service Tax on rent amount paid to Airport Authority for the duty free shops. After following due procedure, the Assistant Commissioner, sanctioned the refund of service tax paid on the rent paid for running the duty free shops situated in the departure lounge of the International airports. 23. The Commissioner (Appeals) has recorded clear finding that the entire movement and sale of articles at the duty free shops of the respondent happen under customs supervision and control and in accordance with Chapter IX of the Customs Act dealing with Warehousing of goods . The respondent files a bill of entry for warehousing treating the duty free goods imported by it to be imported goods as per procedure prescribed in Customs Act for bringing goods into duty free shop. Thus, the Respondent can be deemed as importer for Section 58 of the Act which allows imported goods to be warehoused without payment of duty on execution of a bond. It is also not disputed by eit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia by the individual international passengers. Therefore, there is no reason to disturb the findings to deny refund to the Respondent. 24. There is no dispute on the fact that it is not possible to carry on the export sales at the Duty Free Shop at the departure terminals, without having a space there, which can only be possible by taking the duty free shops on rent from Airport Authority of India. In view of the above, the renting of airport premises at the departure module has a direct nexus with the export sale being made by the Respondent. 25. Thus, we do not find any error in the findings recorded for being satisfied with the compliance of conditions of the Notification No.41/2012-ST dated 29.06.2012. 26. We have already pointed out that the Service Tax is collected without authority of law. Such collection of tax on services which are not taxable services, entitles the Respondent for grant of refund. In any event elaborate findings are recorded by the Commissioner (Appeals) even on the issue of inapplicability of the bar of unjust enrichment. The Commissioner (Appeals) has examined the export invoices issued to the international passengers, which is also countersign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fact, Rule 12 of the Excise Rules empowers the Excise Authorities to grant rebate of duty even if some of the procedural requirements are not fulfilled. Even proviso(a) to Section 11B(2) clearly provides that in the case of rebate of duty, the rebated will be granted to the exporter even if the duty element is passed on by the exporter. Thus, under Section 11B, the amount of Excise duty is refunded to the exporter even if the duty element is passed on by the exporter. (ii) Convergys India Services P. Ltd. v. Commissioner of Service Tax, New Delhi - 2012 (25) S.T.R. 251; (iii) Balkrishna Textiles P. Ltd. v. Commissioner of Central Excise, Ahmedabad - 2009 (239) E.L.T. 279, upheld by the Hon'ble High Court of Gujarat reported in 2011 (272) E.L.T. A164 (Guj). Therefore, the findings cannot be said to be illegal or improper. 30. We are of the view that the judgment of the Hon ble Supreme Court in Hotel Ashoka (supra) do not help the Department to retain the amount paid as Service Tax on rent paid for the said Duty-Free Shops, by denying the refund/rebate thereof. There is no valid ground to deny the refund / rebate, by upsetting concurrent findings of l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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