Principal Commissioner Cgst And Cx Delhi (South) vs M/S Airport Retail Private Limited

Court
Delhi High Court

$~71
* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Date of decision: 04.11.2026

# CNR No. DLHC010528522026
+ SERTA 32/2026, CM APPL. 75999/2026, CM APPL.
76000/2026 & CM APPL. 76001/2026
PRINCIPAL COMMISSIONER CGST AND CX DELHI
(SOUTH) .....Appellant
Through: Mr. Anurag Ojha, SSC with
Mr. Dipak Raj, Mr. Aditya
Chaudhary & Mr. Ashish
Chaudhary, Advs.
versus

M/S AIRPORT RETAIL PRIVATE LIMITED .....Respondent
Through:

CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
HON'BLE MS. JUSTICE SHAIL JAIN

AVNEESH JHINGAN, J. (ORAL)
1. This is an appeal under Section 35G of the Central Excise Act,
1944 (hereinafter ‘the 1944 Act’) against the order dated 19.08.2025
passed by the Customs, Excise and Service Tax Appellate Tribunal
(for short ‘the tribunal’).
2. The brief facts are that the Delhi International Airport (Private)
Limited (for short ‘DIAL’) under an agreement dated 04.04.2006
acquired the space of Delhi Airport on lease. By two subsequent
agreements dated 09.11.2006 and 07.02.2008, DIAL granted licence
to the respondent (earlier known as Alpha Future Airport Retail Pvt.
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Ltd.) to operate duty-free shops in the designated areas of the Delhi
International Airport. The licence was granted for consideration of a
fixed monthly licence fee, together with a share of the gross revenue
generated from various categories of products sold in the duty-free
shops subject to a minimum annual guarantee.
2.1 The respondent filed W.P.(C) 8554 of 2008 challenging the
levy of service tax on rentals including royalties payable to DIAL for
hiring space in the airport premises. The petition was allowed on
03.11.2009 relying upon the judgment in Home Solution Retail India
Ltd. v. Union of India & Ors. , 2009 (237) ELT 209 (Del.). On
30.06.2010, the respondent closed its operations at the Delhi Airport.
A show cause notice dated 22.10.2010 was issued to DIAL for the
period 2006-07 to 2009-10 demanding service tax for providing
airport services in terms of Section 65(105)(zzm) of the Finance Act,
1994 (hereinafter ‘the 1994 Act’). A similar notice dated 28.09.2011
was issued to DIAL for the period 01.04.2010 to 30.06.2010. This
Court in W.P.(C) 4274 of 2010 titled Airport Retail Private Limited v.
Union of India & Ors. held that the licence arrangement could not be
subjected to service tax under Section 65(105)(zzm) of the 1994 Act
and could not be considered as ‘airport services’. The demand raised
by the first show cause notice was set aside and vide order dated
05.09.2014, the respondent was granted liberty to file a claim for
refund of service tax.
2.2 On 16.07.2015, the respondent filed a refund claim for
Rs.11,73,30,977/-. Vide Order-in-Original dated 08.12.2016 (for short
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‘O-I-O’), the refund claim was rejected. The Commissioner (Appeals)
dismissed the appeal of the respondent vide order dated 05.06.2017.
The respondent succeeded before the tribunal on 19.08.2025 and
hence the present appeal.
3. The proposed substantial questions of law are as follows:
“i. Whether the taxability of services stand vitiated by
mentioning incorrect sub clause under service tax
provisions?
ii. Whether the hon’ble tribunal was correct in
allowing refund to the assessee consequent to decision
of Hon’ble High Court which decided that more
appropriate heading for taxability in case of assessee
is under clause (zzz) and not under (zzm)?”

4. Learned counsel for the appellant/department had earlier sought
time to have instructions as to whether any issue of taxability is
involved in the appeal. The questions proposed in appeal is of
taxability. The O-I-O rejecting the refund decided the issue of
taxability despite there being a decision of this Court inter se the
parties.
5. The contention is that there is no issue of taxability as the
respondent is not disputing the nature of the services rendered.
Moreover, Section 65(105)(zzzz) of the 1994 Act was retrospectively
amended with effect from 01.06.2007 and the judgment of this Court
is no longer applicable. The agreement between the respondent and
DIAL shall be governed by the amended provision. The service tax is
leviable as the services subject matter of this case, after the
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amendment are covered under Section 65(105)(zzzz) of the 1994 Act.
It is contended that the appeal is maintainable under Section 35G of
the 1944 Act.
6. The contentions raised on the basis of specific instructions from
the department are misconceived. The relevant paragraph of the O-I-O
dealing with the issue of taxability is reproduced below:
“8. Now I take up the issue at 6(b) above. It becomes
relevant to discuss that the party has filed refund
claim against Hon'ble High Court order W.P(C)
No.4274/2010 dated 30.07.2014 and 05.09.2014
merely on the ground that 'taxable service' as defined
under section 65(105)(zzm) of the Act (hereinafter
referred to as the 'airport services') is not applicable in
their case and not sustainable as per finance act, 1994.
In the instant case Mr. Rajiv Mehra, learned ASG
appearing for the Union of India has clearly clarified
at point no. 24 of Hon'ble High Court order that
whereas the services contemplated within the meaning
of 'airport services' under clause (zzm) of section
65(105) of the Act are area specific, the services as
contemplated under clause(zzzz) of section 65 (105)
of the Act were activity specific. It was submitted that
clause 65 (105) (zzzz) was activity specific and in
general covered activity of leasing or licensing use of
space. It was ascertained that if the said
service/activity was carried out in respect of a space
within the specific area of an Airport, the same would
fall within the definition of ‘airport services’. The
clause (zzm) was introduced w.e.f 10.09.2004’ and
with effect from the said date all services rendered
within the specific area of the airport would be
excisable to service tax. Since, the license of
immovable space was granted for a specific space
within the specific area of the airport, the same fell
within the definition of 'airport services' and were thus
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chargeable to service tax.”
7. Before the tribunal the counsel of the department reiterated the
findings recorded in the O-I-O, thereby pressing the issue that after the
amendment of Section 65(105)(zzzz) of the 1994 Act the services
were not covered by the decision of this Court. The contention was
rejected by the tribunal and it was held that the judgment of this Court
was applicable and the services rendered were not ‘airport services’.
8. It would be apposite to quote Sections 35G (1) and 35L of the
1944 Act:
“Section [35G.Appeal to High Court. -
(1) An appeal shall lie to the High Court from
every order passed in appeal by the Appellate
Tribunal on or after the 1st day of July, 2003 (not
being an order relating, among other things, to
the determination of any question having a
relation to the rate of duty of excise or to the value
of goods for purposes of assessment), if the High
Court is satisfied that the case involves a
substantial question of law.
Section 35L. Appeal to the Supreme Court -
1
[(1)]An appeal shall lie to the Supreme Court
from -
2
[( a) any judgment of the High Court delivered -
( i ) in an appeal made under section 35G; or
(ii) on a reference made under section 35G by the
Appellate Tribunal before the 1stday of July,
2003;
(iii) on a reference made under section 35H, in
any case which, on its own motion or on an oral
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application made by or on behalf of the party
aggrieved, immediately after passing of the
judgment, the High Court certifies to be a fit one
for appeal to the Supreme Court; or].
(b) any order passed before the establishment of
the National Tax Tribunal by the Appellate
Tribunal relating, among other things, to the
determination of any question having a relation to
the rate of duty of excise or to the value of goods
for purposes of assessment.
3
[(2) For the purposes of this Chapter, the
determination of any question having a relation to
the rate of duty shall include the determination of
taxability or excisability of goods for the purpose
of assessment.]”
9. A plain reading of Section 35G (1) of the 1944 Act makes it
clear that every order of the tribunal is appealable before this Court on
a substantial question of law. The exception relates to determination
of a question concerning the rate of duty of excise or value of goods
for the purpose of assessment.
10. Section 35L of the 1944 Act deals with appeals to the Supreme
Court. Clause (b) of sub-section 1 of Section 35L provides for an
appeal to the Supreme Court against an order of the tribunal where the
question relating to the rate of duty of excise or the value of goods for
the purpose of assessment has been determined. Sub-Section (2) of
Section 35L of the 1944 Act is inclusive in nature and provides that
the expression “the question having relation to the rate of duty”
includes the determination of taxability or excisability of goods for the
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purpose of assessment.
11. Though the issue involved in the present appeal is of refund but
the department rejected the refund claim on the ground that the
services were taxable after the amendment to Section 65(105)(zzzz) of
the 1994 Act. This issue was also contested before the tribunal and a
question of law is raised in the appeal on this issue.

12. In view of the unambiguous language of Section 35L of the
1944 Act, the appeal is dismissed as not maintainable.
13. All pending applications are also disposed of.
14. Needless to say, the appellant shall be at liberty to avail
remedies in accordance with law.


AVNEESH JHINGAN, J

SHAIL JAIN, J
NOVEMBER 4, 2026
‘JK’


Reportable: Yes
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