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Since the duty free shop is located outside the customs frontier of India, it would be entitled to refund of ITC on the GST first paid by them.

Section 54 of the CGST Act, 2017- Refund – Duty free Shops--The petitioner is a company and is operating duty free shops in the various airports in India. The question raised in the writ petition is regarding the applicability of GST on the concession fees paid by the petitioner to the airport authority under the petition mentioned agreement. This writ petition was filed in January 2018 and on 16.02.2018, this Court granted an order of interim injunction restraining the airport authority from collecting GST from the petitioner herein. The counsel of the petitioner submitted that the petitioner was paying the concession fee under the petition mentioned agreement and also GST to the airport authority. Pursuant to the interim order granted by this Court on 16.02.2018, the petitioner stopped paying GST to the fourth respondent and the concession fees. However, the fourth respondent was paying GST to the government till 31.03.2018. From 01.04.2018, the fourth respondent also did not pay any GST to the government in this regard. This issue came up for consideration before the Hon'ble Bombay High Court in the decision reported in Sandeep Patil vs. Union of India. The High Court on 07.10.2019 held that since the duty free shop is located outside the customs frontier of India, it would be entitled to refund of ITC on the GST first paid by them. The said decision was followed by the Hon'ble Kerala High Court. The court observed that very same approach can be adopted in the case. Held that:- The Hon’ble High Court directed that for the period prior to 28.02.2021, the petitioner need not pay any GST to the fourth respondent. Since the fourth has paid GST for the period from 01.01.2018 to 31.03.2018, even though the petitioner has not paid, the first respondent has to refund to the fourth respondent. The petitioner has to pay GST on the concession fee to the fourth respondent and thereafter claim refund as per Section 54 of the CGST Act with effect from 01.03.2021.
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