InterGlobe Aviation, the operator of India’s largest airline IndiGo, filed a petition with the Delhi High Court on Friday seeking to recover nearly ₹900 crore from the Customs department. The claim relates to Integrated Goods and Services Tax (IGST) and cess paid on aircraft parts sent abroad for maintenance and subsequently re-imported into India.
The move follows a major Delhi High Court judgment in March, which struck down as unconstitutional the levy of IGST and cess on the repair component of goods re-imported after overseas maintenance. Portions of the 2021 Customs exemption notification, which had sought to tax the repair value on re-imports, were also invalidated.
IndiGo’s petition came up before a division bench of Justices Prathiba M. Singh and Shail Jain. However, the matter did not proceed after Justice Shail Jain recused herself, noting that her son is a pilot with IndiGo. The case will now be placed before another bench as directed by the chief justice.
The airline argued that the previous levy amounted to double taxation. It contended that ownership of engines and parts remains with the carrier when sent abroad for repair, making it a supply of services rather than goods. While IndiGo pays basic customs duty upon re-import and discharges GST under the reverse charge mechanism, Customs authorities imposed IGST and cess again on the repair value, effectively taxing the same activity twice.
In March, a Division Bench of the Delhi High Court ruled that re-imported, repaired goods constitute an import of services, not goods. The court clarified that IGST on imported services can only be levied under Section 5(1) of the IGST Act, rejecting the Union government’s claim that the 2021 amendments were merely clarificatory, noting instead that they expanded the tax base impermissibly.
Following the judgment, IndiGo became eligible to seek a refund of IGST and cess paid under protest, prompting the latest petition. A lawyer involved in the case said, “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.”
The dispute traces back to the post-GST transition. Initial notices and a 2021 CBIC circular clarified that IGST applies only to repair, insurance, and freight costs. Later notifications sought to expand IGST to re-imports, sparking legal challenges by IndiGo and culminating in the Delhi High Court ruling, which provided relief to airlines routinely sending aircraft components abroad for specialized maintenance.
The petition arrives amid heightened regulatory scrutiny of IndiGo, following severe flight disruptions caused by a pilot shortage. The DGCA has capped IndiGo’s capacity by 10%, issued a notice, and launched a probe.
In response, the airline announced that it had initiated an external review of the operational disruptions, appointing US-based Chief Aviation Advisors LLC, led by Captain John Illson, to conduct an independent root cause analysis. The timeline for the report has not been specified. The DGCA told the Delhi High Court that while penalty provisions exist, it avoided taking “knee-jerk” action in view of public interest.
