Supreme Court to hear customs department’s plea in IndiGo IGST dispute over re-imported parts
The Supreme Court on Monday agreed to examine a dispute between the customs department and InterGlobe Aviation Ltd., which operates India’s largest airline IndiGo, over whether Integrated Goods and Services Tax (IGST) should be levied on the repair costs of goods re-imported into India after being sent abroad for maintenance.
A bench of Justices B.V. Nagarathna and R. Mahadevan issued a notice to IndiGo after hearing the custom department's plea.
The case reached the apex court after the customs department challenged a March ruling by the Delhi High Court that struck down as unconstitutional a portion of a 2021 customs notification requiring payment of IGST and cess on such re-imported goods.
Additional solicitor general N. Venkataraman, appearing for the customs department, said, “An important constitutional question has arisen in this matter. The judgement hurts us—it declares the law unconstitutional and affects every re-import."
Lawyers representing IndiGo, however, told the court that the airline was still awaiting refunds from the department despite the high court’s order and that officials had refused to comply with the ruling. “Our refunds are all getting stuck now. They are refusing to abide by the [high] court’s order,” they argued.
Queries emailed to Indigo remained unanswered at the time of publishing this report.'
Case history
The Delhi High Court’s March judgement brought major relief to airlines. It was in response to a 2023 petition filed by InterGlobe Aviation, which challenged the imposition of IGST on re-imported aircraft and parts following repairs overseas. IndiGo had argued that since aircraft engines and parts sent abroad for repair remained its property, their temporary export constituted a supply of services and not goods. Therefore, re-importing them after repairs should not attract additional tax.
The high court upheld IndiGo’s contention, ruling that IGST on imported services could be levied only under Section 5(1) of the IGST Act, not through customs notifications. It clarified that re-importing repaired goods amounted to an import of services, not goods, and therefore could not be taxed under the Customs Tariff Act.
Rejecting the government’s argument that the 2021 amendments were mere clarifications, the court said they had in fact expanded the tax’s scope unlawfully. In a 25 January 2023 interim order, the court directed IndiGo to pay IGST provisionally. After the final ruling, the airline became entitled to a refund of the taxes.
