IndiGo moves Delhi HC seeking ₹900-crore refund from customs on IGST for re-imported parts

InterGlobe Aviation, which operates India’s largest airline IndiGo, filed a petition in the Delhi High Court on Friday seeking near recovery. ₹900 crore from the customs department.

This amount relates to Integrated Goods and Services Tax (IGST) and deduction paid on repair costs of aircraft parts re-imported into India after maintenance abroad.

The move follows a major judgment by the Delhi High Court in March, which declared IGST duty unconstitutional and deduction on the repair component of goods re-imported after overseas maintenance.

These decisions rescinded parts of the 2021 Customs exemption declaration, which was intended to tax repair value on reimportation.

IndiGo’s new plea was raised before a bench of Justices Prathiba M. Singh and Shail Jain on Friday.

However, the matter did not proceed after Justice Shail Jain recused herself by informing the court that her son was a pilot with IndiGo.

The case will now go before another court under the chief judge’s order.

IndiGo argued before the court that the previous tax amounted to double taxation. The airline stated that when aircraft engines and parts are sent abroad for repairs, ownership remains with the carrier, so the transaction becomes the supply of services rather than goods. Post re-importation, IndiGo pays basic customs duty without dispute and also cancels GST under reverse charge mechanism on repair service. Despite this, the airline argued that customs officials imposed IGST and re-deducted the cost of repairs, effectively taxing the same activity twice.

In March, the Delhi High Court Division Bench had rejected the relevant part of the 2021 notification, holding that re-imported, repaired goods constitute imports of services and not goods.

legal challenge

The court held that IGST on imported services can be collected only under Section 5(1) of the IGST Act and not through customs notification. He also rejected the Union government’s stance that the 2021 amendments were merely descriptive and instead observed that they impermissibly widened the tax base.

Following the decision, IndiGo was entitled to demand refund of IGST and deduction of the amount paid under protest to the tune of approximately EUR 1 million. ₹900 crore — promoting the latest petition.

A lawyer participating in the case, requesting anonymity, said, “Shortly after the court canceled the IGST on re-importation, we approached the ministry to request a refund. However, the ministry refused the refund on technical grounds, which forced us to take it to court.”

The dispute arises from the post-GST transition. While the initial notifications and the Central Board of Indirect Taxes and Customs (CBIC) circular 2021 clarified that IGST was applicable only for repairs, insurance and transportation costs, subsequent notifications sought to extend IGST to re-imports as well.

This led to a legal challenge by IndiGo and resulted in the Delhi High Court’s decision, which brought significant relief to aviation companies that routinely send aircraft components abroad for specialized maintenance.

IndiGo declined to comment MintEmailed query from .

The petition comes at a time when regulatory scrutiny on IndiGo is at its peak following a week of severe flight disruptions due to pilot shortage, an event that has shaken India’s aviation ecosystem, given IndiGo’s 60% domestic market share and dominance on many key routes. The directorate general of civil aviation (DGCA) had already limited IndiGo’s capacity by 10%, issued a notification and launched an investigation.

Sifting through the chaos

In a significant corrective step following major flight cancellations, the airline on Friday afternoon announced it had launched an external investigation into recent operational disruptions. The airline appointed US-based Chief Aviation Advisors LLC, led by global aviation veteran Captain John Illson, to conduct an independent investigation and root cause analysis.

The airline did not specify a timeline for sending this report.

Earlier this week, the DGCA informed the Delhi High Court that it had refrained from taking “sudden” action against IndiGo due to greater public interest, even though there were penal provisions, including suspension of licence, under the law.