IndiGo Seeks ₹900 Crore Customs Duty Refund in Delhi HC

New Delhi | December 13, 2025: India’s largest airline, IndiGo, has approached the Delhi High Court seeking a refund exceeding ₹900 crore, alleging that customs authorities unlawfully imposed double taxation on aircraft engines and components re-imported into India after overseas maintenance and repairs.

The petition, filed by InterGlobe Aviation Ltd, argues that the tax demand violates constitutional safeguards and settled principles of indirect taxation. The airline has contended that the levy amounts to charging tax twice on a single transaction — once as a service and again as a goods import.

IndiGo’s Core Argument: Double Taxation on the Same Transaction

According to IndiGo, aircraft engines and spare parts sent abroad for repair were re-imported into India through more than 4,000 bills of entry. The airline stated that it had already discharged Goods and Services Tax (GST) under the reverse charge mechanism, treating the overseas repair activity as a service.

Despite this, customs authorities allegedly levied basic customs duty (BCD) again, classifying the re-imported items as fresh imports. IndiGo told the court that such an interpretation is legally flawed and economically unjustified.

The airline maintained that once GST has been paid on the repair service, re-importing the same goods should not trigger a separate customs duty, as ownership of the goods never changed.

Tribunal Rulings Ignored, Airline Claims

IndiGo pointed out that the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) had earlier ruled in similar matters that customs duty cannot be imposed twice on re-imports following repairs.

While the government later amended the relevant notification, the tribunal clarified that the revised provision would apply prospectively. IndiGo argued that despite this clear legal position, customs authorities continued collecting duty on past transactions, eventually accumulating demands exceeding ₹900 crore.

The airline claimed that this action directly contradicts established judicial precedent.

Duty Paid ‘Under Protest’, Refund Blocked

IndiGo informed the court that the disputed customs duty was paid “under protest,” preserving its right to seek a refund. However, when refund applications were filed, the Customs Department rejected them on procedural grounds.

Authorities reportedly insisted that each of the thousands of bills of entry must be reassessed individually before any refund could be processed. IndiGo has described this approach as an administrative roadblock rather than a legal requirement.

Tax professionals note that disputes of this scale typically require structured financial verification and reconciliation — a process aligned with best practices followed in professional auditing services in India, where consolidated assessments are routinely conducted for complex, high-volume transactions.

Constitutional Challenge and Industry-Wide Impact

In its petition, IndiGo has invoked Article 265 of the Constitution, which mandates that no tax shall be levied or collected without the authority of law. The airline argued that the disputed levy lacks a legal basis and undermines certainty in India’s tax regime.

Beyond its own case, IndiGo warned that the issue affects the entire aviation sector. Aircraft engines and components are routinely sent overseas for maintenance due to the absence of specialised facilities in India. Subjecting such re-imports to double taxation, the airline said, significantly inflates operating costs and could indirectly impact airfares.

What Lies Ahead

The Delhi High Court will now examine whether the customs levy constitutes impermissible double taxation and whether refunds can be denied on procedural grounds alone.

A ruling in IndiGo’s favour could unlock a ₹900-crore refund and set a precedent for other airlines facing similar disputes. Legal experts believe the verdict may also clarify how repaired goods should be treated under customs law — as service-linked transactions rather than fresh imports.