IndiGo hit with Rs 944 crore tax penalty, calls order ‘erroneous and frivolous’

Despite the recurring tax disputes, IndiGo has maintained that these penalties have "no material impact" on its financials, operations, or business activities.

InterGlobe Aviation, the parent company of IndiGo, has been slapped with a penalty order of Rs 944.20 crore by the Income Tax Department for the assessment year 2021-22. The airline, however, has termed the order "erroneous and frivolous."

According to IndiGo, the penalty was imposed by the Assessment Unit of the Income Tax Department, while an additional fine of Rs 2.84 crore was levied by the Chennai Joint Commissioner. The dispute arose over a denial of input tax credit due to discrepancies in the financial records from fiscal 2018 to fiscal 2020.

"The order has been passed on the basis of an erroneous understanding that appeal filed by the company before the Commissioner of Income Tax (Appeals) (CIT(A)) against the assessment order under Section 143(3) has been dismissed, whereas the same is still alive and pending adjudication," IndiGo stated in its official response.

The airline further asserted that the penalty order "does not comply with the law" and reiterated its stance that it is "erroneous and frivolous." IndiGo confirmed that it will challenge the ruling and pursue legal remedies against the decision. The airline also clarified that the penalty will not have any "significant impact on financials, operations, or other activities of the company."

This is not the first time IndiGo has faced tax-related penalties. On February 5, InterGlobe Aviation disclosed that it had received GST demand orders amounting to Rs 116 crore from tax authorities in Delhi and Chennai. The Delhi Additional Commissioner had imposed a penalty of Rs 113 crore, primarily over the classification of services provided to offshore recipients as taxable, rather than as exports of services.

In another instance, on January 15, the Customs Department imposed a fine of a little over Rs 25 lakh on IndiGo in connection with duties on jet fuel. The Joint Commissioner (Customs) in Ludhiana issued the order concerning additional duty on remnant Aviation Turbine Fuel (ATF). Additionally, the Principal Commissioner of Customs at the Air Cargo Complex (Import) had earlier levied a Rs 2.17 crore penalty on January 6 after denying a duty exemption on the import of aircraft parts.

Despite the recurring tax disputes, IndiGo has maintained that these penalties have "no material impact" on its financials, operations, or business activities.