The court declared unconstitutional a part of the 2021 customs department exemption notification that required payment of integrated GST and a cess on the repair cost of goods re-imported into India after being sent abroad for maintenance.
In a major 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.
The court declared a portion of the 2021 customs exemption notification unconstitutional, ruling that IGST and cess cannot be imposed on the repair cost of such goods.
The verdict came in response to a 2023 petition filed by InterGlobe Aviation, the parent company of IndiGo, challenging the IGST levy on re-imported aircraft and parts post-repair.
IndiGo argued that since aircraft engines and parts sent abroad for repair remain its property, their export for maintenance constitutes a supply of services rather than goods. As a result, the airline contended that re-imported goods should not face additional taxation beyond the original import duties.
A division bench comprising Justices Yashwant Varma and Ravinder Dudeja upheld IndiGo’s argument, ruling that IGST on imported services can only be levied under Section 5 (1) of the IGST Act, not through customs notifications.
The court clarified that re-imported repaired goods constitute an import of services, not goods, making them ineligible for taxation under the Customs Tariff Act.
The court rejected the government’s argument that the 2021 amendments were merely clarifications, stating they improperly expanded the tax scope.
In a previous interim order on 25 January 2023, the court had directed IndiGo to pay IGST provisionally, pending final judgment. With this ruling, the airline is now entitled to a refund of the tax paid.
Source: LiveMint
