IndiGo Moves Delhi High Court for Refund of Over
₹900 Crore in Customs Duty on Re-imported Aircraft Parts
Justice Shail Jain recused from hearing
the matter as her son is a pilot with IndiGo.
Case Background
·
InterGlobe
Aviation Ltd (IndiGo) has approached the Delhi High Court
seeking a refund of ₹900 crore customs duty paid on re-imported aircraft
engines and parts after overseas repairs.
·
The case is titled InterGlobe
Aviation Vs Deputy Commissioner (Refund) Customs.
·
Justice Shail Jain recused
from hearing the matter since her son is a pilot with IndiGo.
IndiGo’s Arguments
·
Customs duty was paid once at re-import,
and GST was discharged separately on repair services under reverse charge.
·
Customs authorities levied duty again,
treating the re-import as import of goods, which IndiGo claims is unconstitutional
and a double levy.
·
The customs tribunal earlier ruled
that duty cannot be levied again on re-imports after repairs, and amendments to
exemption notifications apply only prospectively.
·
Despite this, customs officers compelled
IndiGo to pay duty under protest to clear critical aircraft parts, across 4,000+
bills of entry.
Refund Dispute
·
IndiGo argued:
o Duty
was paid under protest, not voluntarily.
o The
Supreme Court’s ITC Ltd. ruling cited by authorities does not apply here.
o Reassessment
demands deny IndiGo the benefit of prior court rulings declaring the levy unconstitutional.
Legal Context
·
In March 2024, Delhi High Court
ruled in another IndiGo case that re-import of aircraft parts after repairs is an
import of services, not goods.
·
Once taxed under GST, additional customs
duty under the Customs Tariff Act was held unconstitutional.
·
The issue is now pending before the
Supreme Court.
Key Takeaway
IndiGo is contesting what it calls an unconstitutional
double taxation on re-imported aircraft parts, seeking a massive refund of ₹900
crore. The case highlights the tension between customs authorities’ interpretation
and prior judicial rulings, with final resolution awaiting the Supreme Court.
InterGlobe
Aviation Ltd which operates India’s largest airline IndiGo, has moved the Delhi
High Court seeking a refund of over ₹900 crore paid as customs duty on aircraft
engines and parts re-imported into India after overseas repairs [Interglobe Aviation Vs Deputy Commissioner (refund) Customs]
The matter was heard on Friday by a Division
Bench of Justices Prathiba M Singh and Shail
Jain before whom IndiGo argued that the levy of customs duty on such re-imports
was unconstitutional and amounted to double levy on the same transaction.
However, Justice Shail Jain recused from
hearing the matter as her son is a pilot with IndiGo. The case will now come up
before another Bench subject to the order of the Chief Justice.
Advocate V Lakshmikumaran,
appearing for IndiGo, submitted that at the time of re-import of aircraft engines
and parts after repairs, it paid basic customs duty without dispute. Separately,
since repair constitutes a service, it also discharged Goods and Services Tax (GST)
on a reverse charge basis. However, customs authorities insisted on levying customs
duty again by treating the same transaction as import of goods.
According to the airline, the issue had
earlier been settled by the customs tribunal, which held that customs duty could
not be levied again on re-imports following repairs.
Although the relevant exemption notification
was later amended, the tribunal ruled that the amendment would apply only prospectively.
IndiGo told the High Court that it had subsequently held that charging customs duty
again on such re-imports was unconstitutional and struck down the relevant portion
of the notification.
Despite this, customs authorities allegedly
compelled IndiGo to pay the duty to secure clearance of aircraft engines and other
critical components. The airline submitted that unlike GST, which is self-assessed,
customs clearance depends on the approval of officers and aircraft could not be
grounded indefinitely. As a result, it paid the duty under protest across more than
4,000 bills of entry, amounting to over ₹900 crore.
When IndiGo later filed refund claims,
customs authorities refused on the ground that the airline must first seek reassessment
of each bill of entry. IndiGo argued that it had paid duty under protest in every
case and that speaking orders had already been passed on the protested assessments,
against which appeals were filed.
The airline further contended that the
department’s reliance on the Supreme Court’s decision in ITC Ltd. was misplaced.
It argued that the ruling applied to cases where duty was voluntarily paid and later
sought to be refunded, and not to situations where duty was paid under protest and
a court had already ruled in favour of the taxpayer.
IndiGo told the Court that despite repeated
representations, including to the Principal Commissioner, no reassessment orders
had been passed. It argued that insisting on reassessment even after a declaration
of unconstitutionality effectively denied it the benefit of the court’s judgment.
In March 2024, Delhi High Court had in
another case filed by Indigo held that re-import of aircraft and aircraft parts
after overseas repairs constitutes an import of services, not goods. It ruled that
once the transaction was taxed as a supply of service under the GST regime, the
Revenue could not impose an additional levy under the Customs Tariff Act.
The High Court had held that the notification,
which sought to levy “tax and cess” over and above IGST, was unconstitutional and
ultra vires the IGST Act.
The issue is currently pending before the
Supreme Court.