India’s GST Appellate Tribunal has ordered refunds on eight Covid-era claims, saying airlines can recover tax on cancelled tickets when they return the full fare and maintain passenger-level records.
Singapore Airlines has won a key ruling on Indian goods and services tax refunds after a tribunal said the carrier could recover GST paid on cancelled tickets, provided it had already returned both the fare and the tax to passengers and could show documentary proof.
The GST Appellate Tribunal’s Ernakulam bench said there was enough evidence to show the money had gone back directly to the relevant passengers, meaning the tax burden had not been passed on. In that circumstance, the tribunal held, the airline was entitled to a refund and the revenue department should process the claim within two weeks, with interest.
The dispute concerned eight refund claims worth ₹45,92,528 for the period from October 2019 to March 2021, when Covid-19 disruptions forced the airline to cancel flights. According to the tribunal’s order dated October 16, Singapore Airlines refunded passengers the full fare, including GST, but was unable to adjust credit notes against output tax.
The ruling also underlines a wider point for the aviation sector: GST should not become a permanent cost when a flight is cancelled and the customer has already been repaid in full. Tax specialists quoted by The Hindu BusinessLine said the decision is helpful for the industry, but also a reminder that companies need strong records to clear the test of unjust enrichment, which prevents a taxpayer from receiving a refund where the tax burden has effectively been passed on to someone else.
Rahul Shekhar, a partner in indirect tax at Nangia Global, told The Hindu BusinessLine that the ruling is a positive development because it recognises that tax should not stick where the underlying transaction has been reversed. He added that tax officials should weigh the full set of documents rather than turning down genuine claims on technical grounds. Rajat Mohan, managing partner at AMRG Global, said the key issue was evidence, noting that passenger-level records linking invoices, credit notes and refund settlements showed that no tax had been retained. He cautioned that taxpayers who cannot produce that trail, particularly where tickets are sold through agents, should not assume the same outcome.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
