The largest airline in India by market share, IndiGo, has approached the Delhi High Court to recover more than Rs 900 crore in customs duty it paid on aircraft engines and parts that were returned from overseas maintenance. The carrier claims that since it had paid GST on those identical repair services, the fee is an illegal double burden. The petition, which was filed recently, criticizes customs officials for considering re-imports as fresh goods imports in spite of earlier court rulings to the contrary.
In order to keep the planes in flight, IndiGo paid the duty under protest on over 4,000 bills of entry. In front of Justices Prathiba M. Singh and Shail Jain, attorney V Lakshmikumaran said that basic customs duty was paid on re-entry without a struggle, but repairs count as services hit with GST under reverse charge. However, customs officials doubled down, imposing duties once more as though brand-new equipment had just arrived from elsewhere.Since her son is an IndiGo pilot, Justice Jain resigned, moving the matter to a different bench, maybe on December 19. Refund requests were rejected by Customs, and the case is already entangled in Supreme Court appeals. IndiGo relies on previous rulings by high court benches and customs tribunals that declared such double dipping to be illegal.
Double Taxation Fight at Core of Plea:
IndiGo’s complaint boils down to one transaction being taxed twice: once as a service abroad, and again as goods returning home. Engines and components are sent overseas for maintenance, repair, and overhaul, keeping the fleet airworthy in the face of rising demand. However, customs marked re-imports with duty on repair costs, insurance, and freight, matching a 2021 notification that the Delhi High Court later dismissed as excess in March.
That earlier ruling struck down parts of Notification 36/2021-Cus, deeming extra IGST and cess on re-imports unconstitutional under Article 265-no tax without law. IndiGo argues the same logic applies here, forcing payment to clear critical components despite solid precedents. Customs pushed back, calling repairs embedded in goods value, but tribunals shot that down as double taxation impermissible.The Rs 900 crore tab piles pressure on an airline already dodging flak for mass cancellations and delays at big airports. Parent InterGlobe Aviation disclosed the move in stock filings, stressing no big hit to books or ops yet. External tax pros back their stand, but refunds hinge on court muscle against revenue hawks.
Past Rulings and Ongoing Battles:
Customs tribunals cleared the path by classifying post-repair re-imports as services rather than newly chargeable commodities. In March 2025, the Delhi High Court reiterated this, rejecting similar IGST demands and citing the Mohit Minerals case, which states that there is no GST overlap on already-taxed imports. With SLP diary 49140/2025 questioning delegated powers and aviation tax regulations, the Supreme Court jumped in October and sent notices to IndiGo regarding customs’ challenge to that victory.
Indigo is no stranger to scrapes. Ahmedabad and Chennai customs penalized the airline around Rs 2.76 crore in May for duty claims, which it intends to fight through appeals. It requires that all responsibilities be paid correctly and without causing a financial burden. Reverse charge. According to them, the GST on foreign MRO services already covers the expense; customs’ new fee only adds to the problem.These fights highlight issues with the Make in India program in aviation. Sending parts abroad fills holes in local MRO while domestic hubs expand. The double tax hinders that, raising expenses as IndiGo plans to expand its fleet to 1,000 planes by the end of the decade amid a passenger boom.
Broader Stakes for Airlines and Policy:
Victory could unlock refunds for peers like Air India, SpiceJet facing same heat on re-imports. It’d clarify GST-customs overlap, easing burdens on carriers outsourcing repairs to hubs like Singapore, US. Customs clings to tariff tweaks taxing repair value, but courts lean taxpayer-side on double jeopardy.
IndiGo’s timing has come under fire: a Rs 58.75 crore GST penalty from Delhi South for FY21 was levied on December 12, which the airline deemed incorrect. It intends to file appeals, backed by advisers, with no predicted impact on daily flights or profitability. Fleet problems such as the Pratt & Whitney engine issues that have grounded 70+ planes are already squeezing profitability; tax breaks provide breathing room. As the benches shuffle, eyes stay fixed. Refund victory would return capital for expansion, whilst loss would result in more payouts. The story puts tax turf battles to the test, weighing revenue increases against economic realities in a developing economy. Stakeholders are awaiting decisions that will impact long-term airline expenses.
