The Supreme Court on Monday issued a notice to IndiGo’s parent company, InterGlobe Aviation Ltd, in response to a petition filed by the Customs Department and the GST Council challenging a Delhi High Court ruling that had granted IGST exemption on imported aircraft parts repaired and serviced abroad.
A Bench comprising Justice BV Nagarathna and Justice R Mahadevan sought IndiGo’s reply to the plea, which contests the Delhi High Court’s March 2024 judgment. That ruling had struck down a portion of a customs notification requiring airlines to pay Integrated Goods and Services Tax (IGST) on the import of repaired aircraft engines and components.
Government Challenges High Court Ruling
The Customs Department, along with the Union Government, GST Council, and Central Board of Indirect Taxes and Customs (CBIC), have approached the apex court. Represented by Additional Solicitor General N. Venkataraman, the petitioners argued that the High Court’s decision effectively undermines an independent fiscal levy created under the IGST Act, which forms a key part of India’s GST regime.
High Court’s Stand
Earlier, a division bench of Justice Yashwant Varma and Justice Ravinder Dudeja had ruled that levying IGST and cess under Section 3(7) of the Customs Tariff Act, 1975 on re-imported aircraft parts repaired overseas was unconstitutional.
The Court reasoned that once such transactions are already treated as a “supply of service” and taxed accordingly, an additional customs levy would amount to double taxation, violating the principles of fairness and legality.
The bench further held that the levy contradicted Section 25(1) of the Customs Act, 1962, which empowers the government to grant exemptions in the public interest. Consequently, the Court extended IGST exemption to aviation imports covered under Entry 77 of Notification No. 50/2017-Customs and set aside a 2021 CBIC notification that imposed additional “integrated tax and cess” on such imports.
What’s Next
With the Supreme Court now taking cognizance of the matter, the aviation and taxation sectors are watching closely. The outcome could impact tax treatment for airlines importing repaired parts, shaping future policies on GST exemptions and customs duties in India’s aviation industry.
Case Title: Principal Commissioner of Customs (ACC Import) & Ors. vs. InterGlobe Aviation Ltd
Diary No.: 49140-2025
