In a significant relief for aviation companies, including IndiGo, the Delhi High Court on Tuesday struck down the Integrated Goods and Services Tax (IGST) levy on the repair cost of goods re-imported into India after being sent abroad for maintenance.
A division bench comprising Justices Yashwant Varma and Ravinder Dudeja delivered the judgment, striking down the additional IGST levy imposed under the 2021 notification.
The bench ruled as unconstitutional a provision in the 2021 customs department exemption notification that mandated payment of IGST and cess on the repair cost of such goods.
A petition filed was filed in 2023 by InterGlobe Aviation, the parent company of IndiGo, India’s largest airline. The airline contested the notification and the IGST levy on re-imported aircraft and parts after repairs. IndiGo argued that it had already paid import duties on overseas repairs as part of the import of services and should not be taxed again upon re-importing the repaired aircraft parts.
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The petitioners assert that the reimport is liable to be treated as a transaction of supply of service or import of service in terms of Section 5(1) of the IGST read along with Entry 3 comprised in Schedule II of the CGST. The IGST component of tax is duly discharged by the writ petitioners. The respondents, however, assert that IGST is payable at the time of import of the subject goods since they are after all goods which are being reimported into the territory of India.
The petitioners submitted that it is at this stage that Section 3(7) of the CTA gets attracted along with the Proviso to Section 5(1) of the IGST.
The court noted that the amendments ushered in by virtue of Notification No. 36/2021 together with the clarification issued by the CBIC were clearly intended to expand the tax net and cannot, therefore, be termed to be merely clarificatory. The original notifications were in unambiguous terms restricted to the levy of a BCD. It was this position which was sought to be drastically amended by those changes. In any event, the levy of an additional duty even after the transaction has been subjected to the imposition of a tax treating it to be a supply of service would be clearly unconstitutional and cannot be sustained.
“We accordingly allow the writ petitions challenging Notification No. 36, insofar as it seeks to impose an additional levy over and above the IGST already imposed under Section 5(1). This additional levy is declared unconstitutional and ultra vires,” the court stated in its ruling.
Case Details
Case Title: Interglobe Aviation Ltd. Versus Principal Commissioner Of Customs Acc (Import) New Custom House New Delhi & Ors.
Case No.: W.P.(C) 934/2023
Date: 04 March, 2025
Counsel For Petitioner: V. Lakshmikumaran
Counsel For Respondent: Anurag Ojha
