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Informist, Tuesday, Mar. 4, 2025

 

NEW DELHI – The Delhi High Court on Tuesday quashed a part of the government's 2021 notification that sought to impose Integrated Goods and Services Tax on reimport of aircraft or aircraft parts into India after their repairs outside the country. "Notification No. 36/2021 insofar as it purports to levy an additional levy over and above the IGST imposed under Section 5(1) (of IGST) by adding the words '...tax and cess' is declared unconstitutional, ultra vires the IGST and is quashed to the aforesaid extent," said the high court.

 

The court's decision will be a relief to InterGlobe Aviation Ltd., parent of the country's largest airline IndiGo.

 

On the clarification the Central Board of Indirect Taxes and Customs issued by way of Circular on Jul. 19, 2021, the high court said that the addition of the words "tax" and "cess" over and above the duty of customs which was originally conceived and provisioned in 2017 notification was "clearly ultra vires" and liable to be declared as an intent to levy an "impost" which is without authority of law. "Circular No. 16/2021(July 2021 circular) issued by the CBIC is consequentially quashed," the court added.

 

The case has its genesis from InterGlobe Aviation having moved aircraft engines and aircraft parts for repair and service outside India. InterGlobe Aviation had said that the amount paid by it for the repairs overseas has been taxed as import of services and therefore the very same goods being reimported to India cannot be subjected to IGST as import of goods. The petitioner had said that both the levies were mutually exclusive.

 

Since the export of the subject goods for repair outside India and their subsequent reimport would fall in the category of "supply of service", no further tax as envisaged under Section 3(7) of the Customs Tariff Act, 1975 would stand attracted, said InterGlobe Aviation. Once a transaction is conferred the character of a supply of service, it would be impermissible for the tax authorities to bring those transactions to tax by treating them as an import of goods and articles, said InterGlobe Aviation. 

 

The government authorities argued that Section 3(7) of the Customs Tariff Act was an independent charging provision levying an additional duty of customs. According to respondents, that levy does not stand effaced consequent to the promulgation of IGST. "...notwithstanding the levy of a tax under the principal provision of Section 5(1) of the IGST, the petitioner does not stand absolved of the liabilities created by Section 3(7) of the Customs Tariff Act," the respondents said.

 

On Tuesday, shares of InterGlobe Aviation ended 3% higher at INR 4,598.70 on the National Stock Exchange.  End

 

Reported by Surya Tripathi

Edited by Ashish Shirke

 

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