InterGlobe Aviation Ltd, which operates India’s largest airline IndiGo, has approached the Delhi High Court seeking a refund of more than ₹900 crore paid as customs duty on aircraft engines and components re-imported into India after overseas repairs. The airline has contended that the levy amounts to unconstitutional double taxation.
The matter, titled InterGlobe Aviation Ltd v. Deputy Commissioner (Refund), Customs, came up before a Division Bench of Justices Prathiba M. Singh and Shail Jain. However, Justice Jain recused herself from hearing the case after disclosing that her son is employed as a pilot with IndiGo. The case will now be placed before another bench in accordance with the Chief Justice’s directions.
Representing IndiGo, Advocate V. Lakshmikumaran argued that the airline had already discharged its tax liability correctly. He submitted that while basic customs duty was paid at the time of re-import, the repair activity itself constituted a service, on which IndiGo paid Goods and Services Tax (GST) under the reverse charge mechanism. Despite this, customs authorities allegedly imposed customs duty again by treating the transaction as an import of goods.
The airline relied on earlier rulings of the customs tribunal, which held that customs duty cannot be levied again on aircraft parts re-imported after repairs. Although the relevant exemption notification was subsequently amended, the tribunal had ruled that such amendment could only apply prospectively. IndiGo further pointed out that the High Court had already struck down the levy as unconstitutional.
According to IndiGo, customs officials nevertheless compelled it to pay the duty to ensure clearance of essential aircraft parts, as aircraft operations could not be stalled indefinitely. The airline stated that duty was paid under protest across more than 4,000 bills of entry, cumulatively amounting to over ₹900 crore.
When refund claims were later filed, customs authorities rejected them, insisting that each bill of entry must first be reassessed. IndiGo countered this by asserting that the payments were not voluntary and that speaking orders had already been passed in protested assessments, which were under appeal.
The airline also disputed the department’s reliance on the Supreme Court’s judgment in ITC Ltd., arguing that it applied only to cases of voluntary payment of duty and not to situations involving payments made under protest following an unconstitutional levy.
IndiGo further highlighted that in March 2024, the Delhi High Court had ruled in another case involving the airline that re-import of aircraft parts after overseas repairs constitutes an import of services, not goods. The court had held that once such transactions are taxed under GST, any additional levy under the Customs Tariff Act would be unconstitutional. That ruling is currently under challenge before the Supreme Court.
