INDIA. The High Court of Judicature at Bombay has quashed a January 2019 order that imposed a goods & services tax (GST) on duty free sales at Mumbai Chhatrapati Shivaji Maharaj International Airport.

Flemingo Travel Retail had challenged the January order, which meant the retailer was not refunded input tax credit from the sale of duty free goods in the departures area at Mumbai Airport. The High Court has now ruled that Flemingo’s challenge has “considerable merit” and that the sale of duty free goods at the airport should not be subject to GST.

Flemingo, through Mumbai Duty Free, is the main travel retailer across terminals at Mumbai Airport

The Court highlighted Article 286 of the Constitution of India, which states: “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 supply takes place outside the state.” Additionally, any law that subjects a duty free retailer to tax would go against the ‘One nation, one tax theory’, which means the same GST laws are applied across India, the Court said.

The ruling from Justices Ranjit More and Bharati Dangre added: “Needless to say that if the duty free shop, [which] caters to the outgoing or incoming international passengers, is subjected to local taxes by the State, the tax burden will increase and the price of the goods, which are supposed to be free of taxes and duties, will go up, and the same would prevent the duty free shops in India from competing with duty free shops at international airports elsewhere in the world. This will also hamper and prejudicially affect our foreign trade, and augmentation and conservation of foreign exchange.”