Emirates urged to pursue statutory appeal over GST exemption on air transportation services; Court emphasizes alternative remedy.
In a significant judgment delivered on April 2, 2026, the Bombay High Court disposed of a writ petition filed by Emirates, challenging the original order passed by the Assistant Commissioner of State Tax, which confirmed the demand along with interest and penalty against the petitioner. Emirates contended that their air transportation services, including ancillary services, should be exempt from Goods and Services Tax (GST) under Notification No. 2/2018 dated January 25, 2018. The notification provides exemption for services by way of transportation of goods by aircraft from a customs station in India to a place outside India.
The petitioner argued that these services constitute a composite supply and should benefit from the exemption specified in Entry 20A of the notification. However, the Department's decision to tax ancillary services separately was seen as contrary to the exemption notification, undermining the intended tax relief for such composite supplies.
The division bench, comprising Justices G.S. Kulkarni and Aarti Sathe, emphasized that the issues raised by Emirates concerning the applicability of the exemption notification should be adjudicated through statutory appellate remedies rather than writ jurisdiction. In their judgment, the court highlighted the availability of an alternative remedy, which is a statutory appeal before the Commissioner of Appeals. This route is deemed appropriate for resolving disputes related to exemption notifications and composite supplies.
The court directed Emirates to file an appeal against the impugned order within four weeks. The appellate authority was instructed to adjudicate the appeal in accordance with the law, without objections regarding limitation due to Emirates' bona fide pursuit of the writ petition. All contentions raised in the petition were kept open for assertion in the appeal proceedings.
This judgment underscores the judiciary's inclination to encourage parties to utilize statutory mechanisms for resolving tax disputes, especially when specialized appellate forums are established to handle such issues. By disposing of the petition, the court reinforced the principle that writ jurisdiction is not the primary avenue for contesting tax assessments when statutory remedies are available.
Bottom line:-
Taxation - Exemption under Notification No. 2/2018 dated 25th January 2018 - Services by way of transportation of goods by aircraft from a customs station in India to a place outside India fall under exempted category - Ancillary services forming part of composite supply cannot be separately taxed, and such issues are to be adjudicated through statutory appellate remedies.
Statutory provision(s): Goods and Services Tax (GST) - Exemption Notification No. 2/2018, Entry 20A
Emirates v. State of Maharashtra, (Bombay)(DB) : Law Finder Doc id # 2894542
