IndiGo slapped with nearly ₹59 crore penalty linked to GST amid disruptions, airline to contest order
Facing a new problem for India’s largest airline, IndiGo almost crashed on the stock markets. ₹59 crore in connection with goods and services taxes (GST) was imposed on the domestic carrier.
According to the dossier published on Friday (December 12), the airline said that the additional Commissioner of CGST, Delhi South Commissionerate, has been fined Rs 100,000. ₹58,74,99,439 for the financial year 2020-21. “The ministry has increased the GST demand along with a penalty,” IndiGo said.
The latest development comes at a time when IndiGo’s operations are experiencing significant disruptions, including hundreds of flight cancellations and delays over the last few days, mainly due to crew shortages and various other factors.
What does IndiGo plan to do next?
Calling the decision “erroneous”, IndiGo plans to appeal the decision before the appropriate authorities.
“The Company believes that the decision made by the authorities was erroneous. Additionally, the Company believes that it has a strong case on the merits supported by the advice of external tax advisors. Accordingly, the Company will appeal this before the appropriate authority,” the application said.
The airline also assured that the order will not have a material impact on the company’s financial condition, operations or other activities.
IndiGo share price
The airline informed the stock exchanges about the penalty decision after market hours on Friday, December 12. Shares of Interglobe AviationIndiGo’s parent company closed 0.86% higher ₹4,860.85 on BSE on Friday.
IndiGo crisis
IndiGo has canceled more than 5,000 flights this month due to severe crew shortages resulting from failure to implement new regulations for pilots.
The airline had previously noted some preliminary factors that contributed to the disruption, including recent changes to the Flight Duty Time Limitations (FDTL) order.
Previously, the Directorate General of Civil Aviation (DGCA) had issued a justification notice to CEO Pieter Elbers and COO Isidore Porqueras following many flight cancellations. The airline requested additional time, stating that given the “complexity and large scale of the operations”, it was “not realistically possible to determine the exact causes at this time”.
Meanwhile, IndiGo CEO apologized to people whose flights were suddenly canceled or postponed due to various reasons. “Thousands of you have not been able to travel, and we are very sorry about that,” he said.
IndiGo appoints experienced aviation expert
IndiGo’s board appointed Chief Aviation Advisors LLC, led by senior aviation expert John Illson, to conduct “root cause analysis of the recent operational disruption”.
“Chief Aviation Advisors LLC, led by veteran aviation expert Capt. John Illson, is to conduct an independent expert review and assessment of the recent operational disruption and contributing factors. The objective is to conduct an independent root cause analysis of the recent operational disruption along with opportunities for improvement,” PTI quoted the airline in its statement as saying.
Concerns about potential antitrust violations
India’s antitrust regulator, the Competition Commission of India (CCI), is examining whether IndiGo violated competition regulations, the news portal reported on Friday, citing a senior official.
The senior official told the news agency that CCI was conducting an internal investigation to determine whether IndiGo had violated competition norms.
According to the official, several factors will be examined, including overall dominant position, dominance on specific routes and potential abuse of dominance.
