Paid under protest: IndiGo moves Delhi HC seeking ₹900 cr customs duty refund for re-import of aircraft parts

India's largest airline by passenger traffic, InterGlobe Aviation or simply IndiGo has moved Delhi high court seeking a refund of over ₹900 crore paid as customs duty on re-import of aircraft engines and parts to India after overseas repairs.

A division bench consisting of Justices Prathiba M Singh and Shail Jain heard the matter on Friday, where IndiGo argued that the levy of customs duty on such re-imports was unconstitutional and amounted to double levy on the same transaction, according to a report by Bar and Bench.

However, Justice Shail Jain recused from hearing the matter as her son is a pilot with IndiGo, the report added. The case will come up before another bench subject to the order of the chief justice of Delhi high court.

According to IndiGo's counsel, at the time of re-import of aircraft engines and parts after repairs, the company paid basic customs duty without dispute. Additionally, the company also had to pay Goods and Services Tax (GST) on a reverse charge basis because repair constitutes a service. As per the IndiGo, the customs officials insisted on levying customs duty again by treating the same transaction as import of goods.

The airline said that the issue had earlier been settled by the customs tribunal, which held that customs duty could not be levied again on re-imports following repairs. Even as the government introduced Notification No 36/2021-Customs in July 2021 effectively taxing re-imports, the amendment was later challenged, and the Delhi high court in March 2025 declared such customs duty on re-imports unconstitutional, and struck down the relevant portion of the notification.

Despite this, according to IndiGo, customs authorities allegedly compelled the carrier to pay the duty to secure clearance of aircraft engines, and other critical components. The airline said that unlike GST, which is self-assessed, customs clearance depends on approval of the officers, and because the aircraft could not be grounded indefinitely, it "under protest" paid the duty across over 4,000 bills of entry, amounting to over ₹900 crore.

When the company later filed for refund claims, the customs authorities allegedly refused on the ground that the airline must first seek reassessment of each bill of entry. IndiGo stated that it had paid duty under protest in every case, and speaking orders had already been passed on the protested assessments, against which appeals were filed.

"IndiGo’s move to the Delhi High Court seeking a refund of over ₹900 crore in customs duty on re-imported aircraft engines and parts highlights a critical issue in the taxation of cross-border aviation repairs. The airline argues that it has been subjected to double taxation, paying GST on repair services performed abroad and then customs duty on the re-import of the same components despite judicial precedents treating such transactions as services rather than fresh imports. IndiGo says it paid the duty “under protest” across thousands of bills of entry to avoid operational disruptions, but customs authorities have refused refunds without reassessing each entry," Aditya Bhattacharya, Partner, King Stubb & Kasiva, Advocates and Attorneys, told Fortune India.

"With the originally assigned judge recusing herself due to a conflict of interest, the matter now awaits a fresh bench. The case underscores the need for clearer alignment between GST and customs laws to ensure predictable tax treatment for the aviation industry," Bhattacharya added.

IndiGo told Delhi high court that despite repeated representations, including to the Principal Commissioner, no reassessment orders had been passed. The company said that insisting on reassessment even after a declaration of unconstitutionality effectively denied it the benefit of the court’s judgment.