The Smart Marty Sky Dispatch
GST tribunal says airlines can claim tax refund if fare, GST returned to passengers
GST Appellate Tribunal ruled that GST paid on cancelled airline tickets is refundable if conditions are met. Singapore Airlines successfully claimed refunds amounting to Rs 45,92,528 for flights cancelled due to COVID-19. The Tribunal highlighted that sufficient evidence was provided to demonstrate that tax incidence was not passed on to passengers. Taxpayers need to maintain robust documentation to satisfy requirements for refunds to be processed.
A GST Appellate Tribunal has ruled that airlines can claim a refund of GST paid on cancelled tickets if the airline has returned both the fare and the GST to passengers and can provide supporting documents.
The decision concerns eight GST refund claims aggregating to Rs 45.92 lakh filed by Singapore Airlines for cancellations between October 2019 and March 2021, a period affected by the COVID-19 pandemic. The tribunal found sufficient evidence that the refunds reached passengers directly and that the tax incidence was not passed on.
The tribunal instructed the revenue department to process the airline’s refund claim within two weeks and to issue payment along with interest, based on the evidence presented.
The ruling came after the Joint Commissioner’s earlier rejection of the claims. The GSTAT set aside that order, stating the airline was eligible to recover GST collected from passengers and subsequently refunded to them due to flight cancellations, noting sufficient documentation to show the refunds reached passengers directly.
Industry observers say the decision highlights that GST should not become a cost when a transaction is cancelled and the tax collected is fully refunded to customers. They also emphasise the importance of robust passenger-level documentation to satisfy conditions against unjust enrichment.