A GST Appellate Tribunal (GSTAT) has ruled that airlines can claim GST refunds on cancelled tickets if the airline has returned both fare and GST to passengers and provides supporting documentation. According to reports from Business Standard, Rediff Moneynews, The Times of India, and Mint, the ruling came in the case of Singapore Airlines Ltd. v/s Kochi Commissioner of CGST & CE, where the tribunal found 'sufficient evidence' to ensure refunds reached passengers directly and there was 'no passing' of the tax incidence. The tribunal directed the revenue department to process refund claims within two weeks and make payments along with interest. The GSTAT Ernakulam Bench, comprising Vice President Subramanya Rayaprol and Technical Member Ramamoorthi Sriram, found that Singapore Airlines had provided sufficient evidence to establish that refunds had reached passengers directly. As per The Times of India, the tribunal held that Singapore Airlines was eligible for a refund of the GST collected from passengers and paid to the tax department, as the airline had subsequently returned the entire fare, including GST, following flight cancellations during the pandemic in accordance with a Supreme Court order.
The case involved eight GST refund claims totalling ₹45,92,528 by Singapore Airlines for the period between October 2019 and March 2021. As reported by Business Standard, Rediff Moneynews, The Times of India, and Mint, during this COVID-19 affected period, the airline had to cancel flights and returned fares and GST to passengers, but could not adjust credit notes against output tax. The GST Joint Commissioner had earlier rejected these refund claims, prompting the airline to approach the GSTAT. The dispute arose after COVID-19-related flight cancellations led Singapore Airlines to refund passengers the full ticket amount, including GST. The airline issued credit notes for the cancelled tickets but could not fully adjust them against its GST liability because refunds exceeded sales during the relevant period. Its GST returns did not permit it to report a negative balance, prompting the airline to seek a refund of the GST it had already paid to the government. In its order dated October 16, the GSTAT set aside the earlier decision and allowed the refund claims, directing the tax department to refund ₹45.92 lakh to Singapore Airlines with applicable interest.
Rahul Shekhar, Partner-Indirect Tax at Nangia Global, described the ruling as a positive development for the industry, stating that 'GST should not become a cost where a transaction is cancelled' and the tax collected is fully refunded to customers. According to Business Standard, Rediff Moneynews, The Times of India, and Mint, Shekhar emphasized the need for field formations to consider all supporting documents collectively rather than rejecting genuine refund claims on technical grounds. As quoted by news agency PTI, Shekhar said the decision highlighted the need for tax authorities to assess supporting documents collectively instead of rejecting genuine refund claims on technical grounds. Rajat Mohan from AMRG Global noted that the tribunal allowed refunds as 'excess payment of tax' where businesses repaid customers but had no outward liability to absorb credit notes. As per Mint, Mohan explained that the Tribunal had allowed a refund as 'excess payment of tax' in a case where a business has repaid customers but has no outward liability left to absorb the credit note, and the tax stays with the government. He added that what decided the case was evidence, with passenger-level records linking invoice, credit note and refund with settlement data showing no tax was retained, so there was no unjust enrichment.
As reported by Business Standard, Rediff Moneynews, The Times of India, and Mint, the case was decided on evidence showing passenger-level records linking invoice, credit note and refund with settlement data, demonstrating that no tax was retained and there was no unjust enrichment. Singapore Airlines relied on sample air tickets, tax invoices, refund vouchers, credit notes and corresponding Billing Settlement Plan records to establish the refunds. The tribunal found that passenger names and ticket numbers connected the documents, allowing the cancelled tickets to be traced to the refunds. The ruling also relied on a clarification issued by the Central Board of Indirect Taxes and Customs (CBIC) in April 2020, which allows registered businesses to claim a refund under the category of excess tax payment when they have no output tax liability against which to adjust credit notes. The tribunal criticised the authorities for failing to properly examine the records and rejecting the claims on 'flimsy grounds'. As per Mint, taxpayers unable to build that trail, especially for agent-sold tickets, should not assume the same outcome.
