The GST Appellate Tribunal (GSTAT) Ernakulam bench has ruled that Singapore Airlines is entitled to a refund of Rs 45.92 lakh in Goods and Services Tax (GST) collected on cancelled flight tickets between October 2019 and March 2021. The tribunal directed the Kochi Commissioner of CGST & CE to process the claims within two weeks and pay the amount along with interest, overturning a previous rejection by the GST Joint Commissioner.
The dispute centered on eight refund claims arising from pandemic-era cancellations. Singapore Airlines refunded passengers their full fares, including GST, in compliance with a Supreme Court order. However, the airline could not adjust the corresponding credit notes against its output tax liability, leaving the government holding tax on transactions that no longer existed. The tribunal found sufficient evidence that refunds reached passengers directly, confirming the airline did not pass on the tax incidence.
"The appellant airline is eligible for the refund of GST collected from the passengers and paid by them to the GST department, but subsequently refunded the entire amount of fare, including GST, to the passengers, on account of cancellation of the flights due to the Covid-19 pandemic in terms of Hon'ble Supreme Court's order," the tribunal stated in its order dated October 16. The decision hinges on the principle of unjust enrichment, which bars businesses from retaining tax burdens they have already absorbed.
Tax experts view the ruling as a critical precedent for documentation. Rahul Shekhar, partner for indirect tax at Nangia Global, noted that GST should not become a cost when transactions are cancelled and tax is fully returned to customers. He emphasized that tax authorities must assess supporting documents collectively rather than rejecting genuine claims on technical grounds.
Rajat Mohan, managing partner at AMRG Global, highlighted that evidence was decisive. "Passenger-level records linking invoice, credit note and refund, with settlement data, showed no tax was retained, so there was no unjust enrichment," Mohan said. He warned that taxpayers unable to build that trail, especially for agent-sold tickets, should not assume the same outcome. The ruling underscores the necessity of maintaining granular, passenger-level records to substantiate refund claims.