Business · India Bureau
GST refund allowed on cancelled air tickets when fares returned to passengers
India's GST Appellate Tribunal has ruled that airlines can claim GST refunds on cancelled tickets if they have returned both fare and tax amounts to passengers with supporting documentation. The decision provides clarity on tax treatment of pandemic-era flight cancellations.
LSN India ·
The GST Appellate Tribunal (GSTAT) has permitted airlines to claim refunds of GST paid on cancelled air tickets, provided the carrier can demonstrate that both the fare and applicable tax have been returned directly to passengers.
The Ernakulam bench of GSTAT, ruling in the case involving Singapore Airlines and the Kochi Commissioner of Central GST and Central Excise, found "sufficient evidence" that refunds reached passengers without any tax incidence passing through the airline. The tribunal directed the revenue department to process the airline's refund claim within two weeks and authorize payment along with interest.
The case originated from eight GST refund claims totalling Rs 45,92,528 filed by Singapore Airlines for the October 2019 to March 2021 period. During this timeframe, the carrier cancelled flights due to the COVID-19 pandemic and refunded fares and GST to affected passengers. However, the airline was unable to adjust credit notes against subsequent transactions, necessitating the formal refund application.
The tribunal's decision addresses a key compliance issue facing the aviation sector following pandemic-related flight cancellations. Airlines seeking such refunds must maintain documentary evidence proving direct reimbursement to passengers to satisfy tax authority requirements.