InterGlobe Aviation, which operates India’s biggest airline IndiGo, filed a petition with the Delhi High Court on Friday to recover almost ₹900 crore from the Customs department.
This sum relates to Integrated Goods and Services Tax (IGST) and cess paid on the repair expenses for aircraft parts that were re-imported into India after maintenance abroad.
The move follows a major Delhi High Court judgment delivered in March, declaring as unconstitutional the levy of IGST and cess on the repair component of goods re-imported after overseas maintenance.
These rulings struck down portions of the 2021 Customs exemption notification, which had sought to tax repair value on re-imports.
IndiGo’s fresh plea came up on Friday before a division bench of Justices Prathiba M. Singh and Shail Jain.
However, the matter did not proceed after Justice Shail Jain recused herself, informing the court that her son is a pilot with IndiGo.
The case will now be placed before another bench as per the orders of the chief justice.
IndiGo argued before that court that the earlier levy amounted to double taxation. The airline submitted that when aircraft engines and parts are sent abroad for repair, ownership remains with the carrier, making the transaction a supply of services rather than goods. Upon re-import, IndiGo pays basic customs duty without dispute and also discharges GST under the reverse charge mechanism on the repair service. Despite this, Customs authorities imposed IGST and cess on the repair value again, effectively taxing the same activity twice, the airline contended.
In March, a Division Bench of the Delhi High Court struck down the relevant portion of the 2021 notification, holding that re-imported, repaired goods constitute an import of services, not goods.
Legal challenge
The court ruled that IGST on imported services can be levied only under Section 5(1) of the IGST Act, and not via a customs notification. It also rejected the Union government’s stand that the 2021 amendments were merely clarificatory, observing instead that they impermissibly expanded the tax base.
Following the judgment, IndiGo became entitled to seek a refund of the IGST and cess paid under protest—amounting to roughly ₹900 crore—prompting the latest petition.
“We approached the department seeking a refund soon after the court struck down the IGST on re-imports. However, the department declined the refund on technical grounds, which forced us to move the court,” said a lawyer involved in the case, requesting anonymity.
The dispute stems from the post-GST transition. While initial notices and a 2021 Central Board of Indirect Taxes and Customs (CBIC) circular clarified that IGST applies only to repair, insurance, and freight costs, later notifications sought to expand IGST to re-imports.
This sparked a legal challenge by IndiGo, culminating in the Delhi High Court’s ruling that brought significant relief to aviation companies that routinely send aircraft components abroad for specialised maintenance.
IndiGo declined to comment on Mint’s emailed query.
The petition comes at a time when regulatory scrutiny of IndiGo is at its peak, following a week of severe flight disruptions caused by a pilot shortage—an episode that rattled India’s aviation ecosystem, given IndiGo’s 60% domestic market share and dominance on several key routes. The directorate general of civil aviation (DGCA) has already capped IndiGo’s capacity by 10%, issued a notice, and initiated a probe.
Reviewing chaos
In a significant corrective step following the massive flight cancellations, on Friday afternoon, the airline announced that it had initiated an external investigation into its recent operational disruptions. The airline appointed US-based Chief Aviation Advisors LLC, led by global aviation veteran Captain John Illson, to conduct an independent review and root cause analysis.
The airline has not specified the timeline for submitting this report.
Earlier this week, DGCA informed the Delhi High Court that while penalty provisions—including suspension of licence—exist under the law, it avoided taking “knee-jerk” action against IndiGo in view of the larger public interest.
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