GST refund on cancelled air tickets gets GSTAT nod, airlines can claim tax back if passengers receive full refund
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The Goods and Services Tax Appellate Tribunal (GSTAT) has determined that airlines are eligible for refunds of Goods and Services Tax (GST) on cancelled flight tickets, provided they have returned the full ticket amount—tax included—to passengers. This decision eases the burden on carriers struggling to reclaim taxes on voided bookings, especially in the wake of the COVID‑19 pandemic.
Singapore Airlines wins Rs 45.92 lakh GST refund case
The Ernakulam bench of GSTAT ruled in favor of Singapore Airlines Ltd against the Kochi Commissioner of CGST and Central Excise. The dispute covered eight GST refund applications totaling Rs 45.92 lakh for the period from October 2019 through March 2021.
As the pandemic halted travel, Singapore Airlines axed numerous flights and gave passengers a full refund of the ticket price, GST included. Nonetheless, the carrier could not apply the credit notes from those cancellations against its own tax liability, prompting it to request a refund from the tax authorities.
A GST Joint Commissioner initially denied the claims, leading Singapore Airlines to appeal to the appellate tribunal.
GSTAT directs tax department to process refund within two weeks
In its order dated October 16, GSTAT overturned the earlier rejection and ordered the tax department to process the refund claims within two weeks, along with applicable interest.
The tribunal found that Singapore Airlines had submitted ample documentary proof that the refunds were paid directly to the passengers. It further determined that the airline did not keep the tax proceeds, thus meeting the criteria to prevent unjust enrichment.
Experts highlight importance of documentation
Rahul Shekhar, Partner – Indirect Tax at Nangia Global, welcomed the decision, noting that GST should not become an extra cost when a transaction is cancelled and the tax collected has been fully returned to customers.
He also emphasised that tax authorities should review all supporting documents collectively rather than dismissing legitimate refund requests on technicalities.
AMRG Global Managing Partner Rajat Mohan observed that the judgment affirms the right to a tax refund when a business reimburses customers but cannot apply the related credit notes against its outstanding tax liability.
Nevertheless, experts stress that airlines and other firms must keep thorough documentation to prove their eligibility for refunds. Critical records include passenger details, invoices, credit notes, and proof of actual refund transfers—especially when tickets are booked via travel agents.
The decision makes clear that airlines may claim GST refunds on cancelled tickets provided they have returned the entire fare—including tax—to passengers and can present adequate evidence to substantiate the claim.
