The country’s largest airline IndiGo is once again in the headlines, but this time the reason is not the number of flights or new routes, but a tax dispute worth about Rs 900 crore. IndiGo’s parent company InterGlobe Aviation Limited has approached the Delhi High Court regarding the custom duty refund imposed on aircraft engines and parts. The company says that it was taxed twice on the same thing, which is not only wrong but also unconstitutional.
The case was heard in the division bench of Delhi High Court on Friday. Indigo argued that when aircraft engines and other essential parts are sent abroad for repair and then brought back to India, they cannot be considered as fresh imports. Despite this, the Customs Department considered them as new imports and collected huge duty.
double tax allegation
Indigo told the court that the company had already paid basic custom duty at the time of re-import of these parts. Additionally, since repairs done abroad fall within the scope of a service, GST was also paid on the same under the reverse charge mechanism. Despite this, customs officials demanded re-imposition of duty, which the airline termed as double taxation.
Tribunal reference
Senior advocate V. Lakshmikumaran, appearing for the airline, argued that such recovery has already been held wrong by the Customs Tribunal. The tribunal had clearly said that custom duty cannot be imposed again on goods returned after repair. Despite this, refund was not given by the authorities, due to which the company had to approach the court.
The judge stepped aside
An important thing came to light during the hearing. Justice Shail Jain recused himself from hearing this case. She told that her son is a pilot in Indigo airline, so she will not take a decision on this matter. Now this case will be handed over to some other bench on the instructions of the Chief Justice.
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