TMI Blog2018 (12) TMI 1352X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner. Undisputedly, the petitioner is supplying goods to Duty Free Shops and as per Section 2(5) of IGST Act, 2017 export of goods takes place only when goods are taken out to a place outside India. India is defined under Section 2(27) of Customs Act,1962 as India includes territorial waters of India . Similarly under the CGST Act, 2017 under Section 2(56) India means the territory of India including its territorial waters and the air-space above its territory and territorial waters and therefore, the goods can be said to be exported only when they cross territorial waters of India and the goods cannot be called to be exported merely on crossing customs frontier of India - The petitioner's contention is that no GST is payable on such supply taking place beyond the customs frontiers of India as the same should be considered as export of goods under Section 2(5) of the IGST Act, 2017 and should be zero rated supply under Section 2(23) read with Section 15(1) of the IGST Act, 2017 is misconceived. The location of the DFS, whether within customs frontier or beyond, shall be within India as long as it is not beyond EEZ (200 nautical miles). Therefore, DFS cannot be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first importation subject to certain conditions. The bill of entry clearly indicates the Duty Free Operator as an importer . The imported goods are warehoused at a bonded warehouse (customs warehouse) and the bill of entry also discloses that the goods imported are for sale only for Duty Free Shop / Export . 04-It has been further stated that the Duty Free Operator also takes on rent a private bonded warehouse located near the airport as well as certain shops called Duty Free Shops at the arrival and departure terminals of international airports in India. The goods are sold to international passengers without payment of duties and taxes. It has been further contended that the Duty Free Operator is granted special warehouse license under Section 58-A of the Customs Act, 1962 for depositing notified class of goods and such warehouse are kept locked by the proper officer and no entry of any person or removal of goods therefrom are allowed without the permission of the proper officer. 05-It has been further stated that Duty Free Operators transfers the goods from customs warehouse to the private bonded warehouse / special warehouse without payment of duty whenever required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, chocolates, etc. It has been further contended that in respect of indigenous products manufactured in India, which were subjected to payment of Excise Duty and VAT and Government of India in the year 2013, based upon representations received from industry and in order to promote Brand India to the world, issued notifications so as to allow excise duty free sale of goods manufactured in India to international passengers or members of crew arriving from abroad at the Duty Free Shops located in the arrival halls of international airports and to passengers going out of India at the Duty Free Shops located in the departure halls of international airport in the country. 10-It has been further stated that Central Board of Excise and Customs issued a notification on 23/05/2013 granting exemption in respect of payment of taxes subject to certain terms and conditions in respect of certain goods. It has also been brought to the notice of this Court that earlier also notification dated 19/05/1989 has been issued and there were exemptions available to specified goods falling under Chapter 85, when removed for sale from Duty Free Shops at customs airports and since the notification by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and a meeting took place, however, the petitioner was informed that on account of enactment of GST Act and Rules, there is no clarity on the previous exemptions which were provided on the basis of various exemptions notification issued from time to time. 14-The petitioner has further stated that he was told to pay GST and in those circumstances, he is being deprived his potential business opportunity to sell the goods from Duty Free Shops. The petitioner's grievance is that in absence of exemption notification under the Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017, the Duty Free Operators are unable to buy the goods manufactured in India without paying the applicable rate of taxes as provided under the CGST, IGST or SGST as the case may be. 15-The petitioner's contention is that supplies from all over the world (except India) are permitted to be at an Indian Duty Free Shop without payment of duties and taxes. The petitioner has prayed for following relief:- (i)Issue a writ of Mandamus or any other appropriate Writ, Order or Direction in the nature of Mandamus, ordering and directing any supply of goods and service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits of earlier circulars / notifications is not available and therefore, an appropriate writ, order or direction be issued granting exemption from payment of CGST / IGST / SGST. It has also been stated that various global brands from all over the world can be sold in Indian Duty Free Shops without payment of any taxes and duties and the products manufactured in India can not be sold at Duty Free Shops without payment of taxes and therefore, the action of the respondents authorities has severely failed to carry forward its Brand India initiative. 19-It has also been argued that Indian supplier cannot export goods without payment of GST and on account of lack of similar exemptions, which were available during the pre GST regime and the action of the respondent is violative of Articles 12, 14 and 19 (1) (g) of the Constitution of India. The action of the respondent authorities is also in violation of Article 21 of the Constitution of India. It has been argued by learned Senior Counsel appearing before this Court to issue a writ of mandamus by directing the respondents to treat the Duty Free Shops in India as an export without payment of CGST and IGST, since the shops are located b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of (Supra) and the respondents have quoted the relevant portion of the Rule and their contention is that by no stretch of imagination the petitioner can be exempted from payment of CGST / IGST / SGST. 25-The respondents have argued before this Court that so far as point of sale is concerned the case goods are being manufactured at Indore, price of the goods is being received at Indore and they are being dispatched to Duty Free Shops, which is certainly within the territory of India and the person, who is purchasing the goods from the Duty Free Shop is the exporter or the person, who has purchased the goods, meaning thereby, the Duty Free Shop is an exporter and not the petitioner. 26-It has also been argued that exemptions cannot be claimed as a matter of right and the competent authority granting exemption can very well withdraw the exemption granted. In the present case, earlier exemption was not under the GST and therefore, the question of granting exemption keeping in view the fact that petitioner is manufacturing the goods in India, is selling them from Indore to a Duty Free Shop, the question of grant of exemption to the petitioner and to such a class t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as long as it is not beyond EEZ (200 nautical miles). Therefore, DFS cannot be said to be located outside India. Instead, the DFS is located within India. As the supply to a DFS by an Indian supplier is not to 'a place outside India', therefore, such supplies do not qualify as 'Export of Goods' under GST. Consequently, such supplies cannot be made without payment of duty by furnishing a Bond / Letter or Undertaking (LUT) under Rule 96-A of the CST Rules, 2017. Also, he cannot claim refund of unutilized Input Tax Credit (ITC) under Section 54 of the CGST Act, 2017. 30-It has been argued by learned counsel that in alternative and without prejudice to whatever has been stated above, under the GST law, the power to grant exemption to such supplies or to clarify such issues is vested with the GST Council (a constitutional body constituted under Article 279-A of the Constitution of India) which comprises of the Union Finance Minister and the Finance Minister of all the States and it is not within the domain of this Court to issue such exemption notifications. 31-The respondents have placed reliance upon the judgments delivered in the case of reported in , reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation is assigned to either Union or States subject-wise under Schedule-VII of the Constitution. While the Centre is empowered to tax goods upto the production or manufacturing stage, the States have the power to tax goods at distribution stage. The Union can tax services using residuary powers but States could not. Under a unified Goods and Services Tax scheme, both should have power to tax the complete supply chain from production to distribution, and both goods and services. The scheme of the Constitution did not provide for any concurrent taxing powers to the Union as well as the States and for the purpose of introducing goods and services tax, amendment of the Constitution conferring simultaneous power on Parliament as well as the State Legislatures to make laws for levying goods and services tax on every transaction of supply of goods or services was necessary. 37-The Constitution (115th Amendment) Bill, 2011, in relation to the introduction of GST, was introduced in the Lok Sabha on 11/03/2011. The Bill was referred to the Standing Committee on Finance on 29/03/2011. The Standing Committee submitted its report on the Bill in August, 2013. However, the Bill, which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alcoholic liquor for human consumption from the ambit of GST, and services have been defined. h)Article 368 has been amended to provide for a special procedure which requires the ratification of the Bill by the legislatures of not less than one half of the States in addition to the method of voting provided for amendment of the Constitution. Thus, any modification in GST Council shall also require the ratification by the legislatures of one half of the States. i)Entries in List I and List II have been either substituted or omitted to restrict power to tax goods or services specified in these Lists or to take away powers to tax goods and services which have been subsumed in GST. j)Parliament shall, by law, on the recommendation of the Goods and Services Tax Council, provide for compensation to the States for loss of revenue arising on account of implementation of the goods and services tax for five years. k)In case of petroleum and petroleum products, it has been provided that these goods shall not be subject to the levy of Goods and Services Tax till a date notified on the recommendation of the Goods and Services Tax Council. 40-After the constitutional amendment, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the Legislature and by considering what was the substance of the matter [A. V. Fernandez Vs. State of Kerala, AIR 1957 SC 657, p. 661]. Shah, J., has formulated the principles thus : Interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency [Sales Tax Commissioner Vs. Modi Sugar Mills, AIR 1961 SC 1047, p. 1051]. K. Iyer, J., more recently observed : Taxation consideration may stem from administrative experience and other factors of life and not artistic visualisation or neat logic and so the literal, though pedestrian interpretation must prevail [Martan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India. (3) Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export. (4) The provisions of sub-section (3) shall not apply to any sale or purchase of goods unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the exporter to whom the goods are sold in a prescribed form obtained from the prescribed authority. (5) Notwithstanding anything contained in sub-section (1), if any designated Indian carrier purchases Aviation Turbine Fuel for the purposes of its international flight, such purchase s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976:- (1)The sovereignty of India extends and has always extended to the territorial waters of India (hereinafter referred to as the territorial waters) and to the seabed and sub-soil underlying, and the airspace over, such waters. (2)The limit of the territorial waters is the line every point of which is at a distance of twelve nautical miles from the nearest point of the appropriate baseline. (3)Notwithstanding anything contained in sub-section (2), the Central Government may, whenever it considers necessary so to do having regard to International Law and State practice, alter, by notification in the Official Gazette, the limit of the territorial waters. 46-Undisputedly, the petitioner is supplying goods to Duty Free Shops and as per Section 2(5) of IGST Act, 2017 export of goods takes place only when goods are taken out to a place outside India. India is defined under Section 2(27) of Customs Act,1962 as India includes territorial waters of India . Similarly under the CGST Act, 2017 under Section 2(56) India means the territory of India including its territorial waters and the air-space above its ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 23/05/2013, the Central Government had exempted the goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as indigenous goods) when brought into DFS located in the arrival halls at the international customs airports from the factories of their manufacture situated in India for sale to passengers or members of crew arriving from abroad, from the whole of the duty of excise leviable thereon. No such exemption notification has been issued under GST till date. 52-In the case of reported in , the apex Court has held that there is no estoppel against law and recipient of a concession has no legally enforceable right against the Government to grant or to continue to grant a concession except to enjoy benefits of concession during the period of its grant. The apex Court in paragraph No.10 and 11 of the aforesaid judgment has held as under:- 10. The question referred to this bench, as noticed, is whether the State would be estopped from altering/modifying the benefit of concessional tariff by means of the impugned G.O No. 861 dated 30.4.1982 on the principle of promissory estoppel. In fact, insofar as the caustic soda unit of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken at DFS is treated as an export of goods or services. 54-As per Section 2(5) of the Integrated Goods and Services Tax Act, 2017, export of goods with its grammatical variations and cognate expressions, means taking out of India to a place outside India. Further, as per Section 2(56) of Central Goods and Services Tax Act, 2017 India means the territory of India as referred to in Article 1 of the Constitution, its Territorial Waters, Seabed and Sub-oil underlying such waters, Continental Shelf, Exclusive Economic Zone (EEZ) or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976, and the air space above its territory and territorial waters. For the purpose of CGST Act, India extends upto the Exclusive Economic Zone upto 200 nautical miles from baseline. The location of the DFS, whether within customs frontier or beyond, shall be within India as long as it is not beyond EEZ (200 nautical miles). Therefore, DFS cannot be said to be located outside India. Instead, the DFS is located within India. As the supply to a DFS by an Indian supplier is not to 'a place outside India', ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered by applying the relevant provisions of law to the facts the binding nature of the decision on that point will come to an end when the law is changed subsequently. That is because the law as then stood alone was interpreted in relation to the facts. When the law is changed the cause of action itself is changed. Though the former decision which has become final may continue to bind the parties thereto, when the law is changed and thus the cause of action became different, the new law will have to be applied to the facts in the subsequent case even though facts are same because law applicable is different. The Division Bench rendered the decision by defining place with reference to the law applicable at that time. Now the definition underwent radical changes to embrace another room int he same building or a nearby building within a radius of 50 meters in such a way that the existing distance is not further reduced. The definition of place in 1991 (1) KLT 543 cannot therefore be relied on now as the law binding the parties in this case. There is no case that Door No.7/597 is more than 50 meters away from Door No.7/594 or that the distance is further reduced. Both are in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturers Pvt. Ltd. was that it was liable to excise duty in respect of the indicating system that it manufactured and not the whole weighbridge. The contention that weighbridges were not 'good' within the meaning of the Act was not raised and no evidence in that behalf was brought on record. We cannot assume that weighbridges sand on the same footing as mono vertical crystallisers in that regard and told that because weighbridges were held to be exigible to excise duty so must mono vertical crystalliser. A decision cannot be relied upon in support of a proposition that it did not decide. In light of the aforesaid judgment, the issue involved in the present case has not been decided in the case of M/s. Hotel Ashoka (Supra) as it was not a case of supplier supplying goods to a Duty Free Operator. 61-Similarly the judgment delivered by the Bombay High Court in the case of (Supra) does not deal with the subject involved in the present writ petition. It was a case of a person seeking issuance of writ of mandamus directing the respondents therein to exempt the petitioner from charging applicable taxes under the GST legislations on sale of cosmetic products in respect of r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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