Interglobe Aviation Limited Vs Additional Commissioner CGST South Commissionerate & Ors. (Delhi High Court)
The Delhi High Court considered whether compensation received by the petitioner for non-performance, which allegedly resulted in business losses, could be treated as a “supply” under Section 7 of the Central Goods and Services Tax Act, 2017, and consequently subjected to GST. The Court also examined whether such compensation was excluded from the ambit of “supply” in view of the Circular dated 3 August 2022, particularly Clauses 7 and 7.1.
The petitioner argued that, considering the language used in the Circular and the provisions of Section 7 of the CGST Act, the impugned order lacked jurisdiction. After hearing the parties, the Court issued notice to the respondents, with counsel appearing on their behalf waiving formal notice. The matter was directed to be listed on 31 August 2026 for further consideration.
Pending further proceedings, the Court granted interim protection to the petitioner by restraining coercive action. On a prima facie reading of Clauses 7 and 7.1 of the Circular, read with the definition of “service” under Section 7, the Court observed that the amount received by the petitioner appeared to be compensation and could not, in any manner, be termed as “supply.”
