Relief for IndiGo: Delhi HC Quashes IGST Demand on Reimported Aircraft Parts Taxed as Service Import

The Delhi High Court quashed an IGST demand of ₹48 crore on IndiGo Airlines for reimported aircraft parts, ruling they couldn't be taxed as service imports when originally exported for repairs. Justice Rajiv Shakdher held that the transaction constituted goods movement, not service import, since ownership never transferred to the foreign repair agency. The judgment clarifies tax treatment of cross-border repair arrangements in aviation, where components are routinely sent overseas for maintenance. The court rejected the department's argument that repair charges should be taxed under reverse charge mechanism, noting the fundamental character remained goods rather than services. This precedent benefits airlines facing similar GST demands on their maintenance, repair and overhaul (MRO) operations. The ruling also emphasizes that tax authorities must analyze the substance of transactions rather than apply provisions mechanically. IndiGo had paid IGST under protest while challenging the constitutional validity of such demands on reimports.