InterGlobe Aviation Ltd, the parent of IndiGo, has moved the Delhi High Court seeking a refund of over Rs 900 crore in customs duty paid on aircraft engines and parts re-imported into India after overseas repairs, Bar and Bench reported.
A Division Bench of Justices Prathiba M Singh and Shail Jain heard the matter on Friday. Justice Jain recused herself from the case, citing a conflict of interest as her son is employed as a pilot with IndiGo. The case will now be listed before a different bench.
At the heart of IndiGo’s petition is the claim that re-import of aircraft and components after repairs constitutes an import of services, not fresh goods, and should therefore not attract customs duty. The airline has argued that levying customs duty in such cases results in double taxation.
Why IndiGo says the levy is illegal
Senior advocate V Lakshmikumaran, appearing for IndiGo, told the court that the airline had already paid basic customs duty at the time of re-import and separately discharged GST under the reverse charge mechanism, since aircraft repairs are treated as a service.
Despite this, customs authorities treated the re-import as a fresh import of goods and raised additional duty demands, which IndiGo said amounted to a 'double levy' on the same transaction.
The airline also pointed to earlier rulings of the customs tribunal, which had held that duty cannot be imposed twice on re-imported goods following repairs. Although the exemption notification was later amended to clarify prospective application, IndiGo said the tribunal had struck down the portion permitting additional levy as unconstitutional, according to Bar and Bench.
Rs 900 crore paid ‘under protest’
IndiGo told the court it was compelled to pay the additional duty because its aircraft could not remain grounded indefinitely. The airline said it deposited more than Rs 900 crore under protest through over 4,000 bills of entry.
When it later sought refunds, customs officials allegedly insisted that each bill of entry be reassessed individually. IndiGo argued that such insistence, even after a judicial declaration of unconstitutionality, effectively denied it the benefit of the ruling.
Past ruling and what happens next
Earlier this year, the Delhi High Court, in a separate case involving IndiGo, ruled that re-import of aircraft and parts after repairs amounts to an import of services, not goods. The court struck down as unconstitutional a portion of the 2021 customs exemption notification that required payment of IGST and cess on repair costs.
That ruling is currently under challenge before the Supreme Court in a petition filed by the customs department.
Original context: The case comes at a time when Indian airlines rely heavily on overseas engine repair and leasing arrangements, making the tax treatment of re-imports a recurring cost issue for the sector rather than a one-off dispute.
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