New Delhi, Apr 24 (KNN) In the recent ruling by Authority of Advance Ruling (AAR) under Goods and Service Tax, the Duty-Free shops or outlets at the Delhi International Airport is not free from GST duties.

With this, international passengers purchasing goods at airport ‘Duty-Free’ shops are liable to pay GST.

Earlier, under the regime of excise and service tax, the duty free shops were exempted from the levy of Central sales tax (CST) and value added tax (VAT) as sale from such shops were considered as exports.

Post GST, AAR in its ruling said “The said outlet is not outside India… but the same is within the territory of India as defined under section 2(56) of the CGST Act,2017 and section 2(27) of the Customs Act, 1962, and hence the applicant is not taking goods out of India and hence their supply cannot be called ‘export’ 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.”

According to section 2(5) of the IGST Act, export of goods takes place only when goods are taken out to a place outside India. India is defined under Section 2(27) of the Customs Act as "India includes the territorial waters of India".

Under Section 2(56) of the CGST Act, India means the territory of India including its territorial waters and the air space above its territory and territorial waters.

Hence, the goods can be said to be exported only when they cross the territorial waters of India and the goods cannot be called to be exported merely on crossing the Customs Frontiers of India, as per the discussions before the AAR. (KNN/YV)