Passengers whose flights are cancelled often face questions about how much of their ticket price will be refunded. Apart from the airfare, flight tickets include taxes and other charges, making it important to understand which amounts are refundable.
A recent ruling by the Goods and Services Tax Appellate Tribunal (GSTAT) has brought attention to the treatment of GST on cancelled flight tickets. In a case involving Singapore Airlines, the tribunal held that an airline can recover GST deposited with the government when it has already refunded the full ticket fare, including the tax, to passengers.
The ruling, delivered on October 16, 2026, allowed Singapore Airlines to claim refunds of ₹45.92 lakh relating to flights cancelled during the COVID-19 pandemic.
Why did Singapore Airlines approach the GST tribunal?
The dispute arose after Singapore Airlines cancelled several flights during the COVID-19 pandemic and refunded passengers their ticket fares, including the GST collected at the time of booking.
The airline had already deposited the tax with the government. Following the cancellations, it issued credit notes to account for the refunds. Normally, businesses can use such credit notes to adjust their tax liability against subsequent sales. However, Singapore Airlines faced a different situation.
With flight operations severely disrupted during the pandemic, cancellations and refunds exceeded new bookings. Consequently, the airline did not have sufficient output tax liability against which it could adjust the GST already paid.
It subsequently filed eight refund claims totalling ₹45,92,528 for the period between October 2019 and March 2021. However, the GST authorities rejected the claims, questioning whether the airline had provided sufficient evidence to establish that the refunds had reached passengers.
The airline challenged the rejection before the GST Appellate Tribunal.
What did the GST tribunal rule?
The Ernakulam bench of the GSTAT, comprising Vice-President Subramanya Rayaprol and Technical Member Ramamoorthi Sriram, ruled in favour of Singapore Airlines.
The tribunal examined documents submitted by the airline, including passenger tickets, tax invoices, credit notes, refund vouchers and settlement records. It found that the airline had established a connection between the cancelled bookings and the amounts refunded to passengers.
Importantly, the tribunal concluded that passengers had received the refunds and that the airline had not retained the GST collected from them.
This finding was significant because GST refund claims are subject to the principle of unjust enrichment. Under this principle, a business generally cannot receive a tax refund from the government if it has already passed the tax burden on to its customers and has not returned that amount.
In this case, the tribunal found that the tax burden had been returned to passengers.
It also referred to an April 2020 clarification issued by the Central Board of Indirect Taxes and Customs (CBIC), which provides a mechanism for claiming refunds of excess tax payments when credit notes cannot be adjusted against output tax liability.
The tribunal set aside the earlier rejection and directed the tax department to process the refund claims within two weeks, along with applicable interest.
Does this mean passengers will get a full refund of GST?
The ruling provides clarity on the tax treatment of cancelled flight bookings, but it is important to distinguish between refunds claimed by airlines and those payable to passengers.
The case concerned flights cancelled during the pandemic, where Singapore Airlines had already returned the full fare, including GST, to customers. The tribunal examined whether the airline could subsequently recover that tax from the government.
It did not establish a blanket rule requiring airlines to refund the entire ticket price whenever a passenger voluntarily cancels a booking. For passengers, the amount refunded continues to depend on the circumstances of cancellation, the airline's applicable fare conditions and relevant aviation regulations.
For instance, if an airline cancels a flight, the passenger's entitlement may differ from a situation where the passenger cancels a non-refundable ticket. Similarly, cancellation fees and other applicable charges can affect the final amount returned.
Therefore, the GSTAT ruling should not be interpreted as automatically removing cancellation charges or making every flight booking fully refundable.
What should passengers check when claiming a flight refund?
Passengers seeking refunds should examine the original booking invoice and the refund statement issued by the airline or travel platform.
These documents can help establish the airfare paid, GST charged, cancellation deductions and the amount eventually returned. If the airline cancels a flight, passengers should also check the applicable refund and alternative-flight options under aviation regulations.
Where a refund is processed through a travel agent or booking platform, passengers may need to verify whether the amount has been credited by the airline and whether the intermediary has made any deductions.
The GSTAT ruling highlights the importance of maintaining a clear record of refunds.
In the Singapore Airlines case, the documentary evidence linking passenger bookings to actual refunds proved crucial in establishing the airline's entitlement to recover GST.