Refund in case of Duty Free Shops (DFS) at international terminal

Earlier in 2019 vide notification number 31/2019 Central tax dated 28.06.2019 it was confirmed through rule 95A of CGST Rules 2017 that if any retail outlets established in departure area of an international Airport beyond immigration counters making tax free supply to an outgoing international tourist then refund will be granted of tax paid on his inward supply of goods. This refund was available for the supply of goods to foreign tourists who were leaving India, when the remittances had come to the foreign exchange.

To more clarify clarification was also inserted through circular 106/25/2019 dated 29.06.2019 to make this more clear. But on 5th July 2022, Rule 95A was withdrawn with effect from 1st July 2019 vide NN 14/2022-Central Tax. Due to this, the clarification circular was also withdrawn on 6 July 2022 vide circular number 176/08/2022.

So now the doubt has come whether the refund will stop due to the removal of Rule 95A, not only this, will the old refund also have to be returned.

But it is not so because through NN No. 11/2019-Integrated Tax (Rate) supply of goods by a retail outlet established in the departure area of an international airport, beyond the immigration counters, to an outgoing international tourist, exempt from the whole of the integrated tax leviable thereon under section 5 of the Integrated Goods and Services Tax Act, 2017. Also it sale will be treated as deemed Sale as section of 147 of CGST Act' 2017. So, retailer claim refund of ITC on inputs goods by following normal of refund (i.e. ITC refund in case of Export of goods).

GST Council 47th meeting also clarify by explaining "Supplies from Duty Free Shops (DFS) at international terminal to outgoing international passengers to be treated as exports by DFS and consequential refund benefit to be available to them on such supplies. Rule 95A of CGST Rules, Circular 106/25/2019-GST Dated 29.06.2019 and related notification to be rescinded accordingly."