M/S Vasu Clothing Private Limited Through Shri Ajay Jain vs. Union Of INDIA Through Ministry Of Finance

Held

The Court held that the petitioner is not entitled to an exemption from GST on supplies made to Duty Free Shops (DFSs). The Court reasoned that the enactment of the Central Goods and Services Tax Act, 2017 (CGST Act) has introduced a new statutory regime, and under this new law, no specific exemption is available for supplies made by a manufacturer to a Duty Free Operator within India. The Court distinguished the cited precedents, including M/s. Hotel Ashoka, by noting that those cases did not deal with a supplier providing goods to a Duty Free Operator under the current GST framework. The Court also referred to the principle that a later enactment prevails over an earlier one, implying that the CGST Act supersedes previous exemptions. The Court emphasized that it cannot legislate or grant exemptions in the absence of a statutory provision, and therefore, the petitioner cannot escape the liability to pay GST. The writ petition was dismissed.

Facts

The petitioner, M/s. Vasu Clothing Private Limited, a manufacturer and exporter of garments, filed a writ petition seeking exemption from Goods and Services Tax (GST) on supplies made to Duty Free Shops (DFSs) at international airports in India. The petitioner contended that similar supplies globally are exempt and that prior to GST, various indirect taxes were exempted for DFS operations, citing Supreme Court judgments and notifications. The petitioner intended to supply goods to a Duty Free Operator (DFO) who sells them in DFSs. The DFO imports goods, warehouses them under customs control, and sells them to international passengers without payment of import duties, often in foreign currency. The petitioner argued that these sales are effectively exports under Section 69 of the Customs Act, 1962.

Key Issues

1. Whether the petitioner is entitled to an exemption from payment of GST on goods supplied to Duty Free Shops (DFSs) at international airports in India, considering the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act) and the historical exemptions available prior to GST. Petitioner's arguments: The petitioner argued that supplies to DFSs should be treated as exports and thus exempt from GST, similar to how they were treated under previous tax regimes. They relied on the principle established in M/s. Hotel Ashoka (Indian Tourism Development Corporation Limited) Vs. Assistant Commissioner of Commercial Taxes, which granted VAT/Sales Tax exemption for Indian Duty Free Shops. They also pointed to various notifications issued by the Central Board of Excise and Customs (CBEC) prior to GST that provided exemptions for goods supplied to DFSs. They contended that the nature of DFS operations, involving sales to international passengers and foreign currency transactions, warrants continued exemption. Revenue's arguments: The respondents, represented by the Union of India and others, did not explicitly record arguments in the judgment. However, the Court's reasoning implies that the current GST legislation does not provide for such an exemption, and the petitioner's reliance on previous exemptions and case law was misplaced due to changes in the statutory framework.