Interglobe Aviation Ltd Vs Principal Commissioner of Customs ACC (Import) New Custom House New Delhi & Ors. (Delhi High Court)
Delhi High Court in Interglobe Aviation Ltd Vs Principal Commissioner of Customs ACC (Import) New Custom House New Delhi & Ors. addressed the contentious issue of imposing Integrated Goods and Services Tax (IGST) on the repair cost of goods re-imported into India after being sent abroad for maintenance. The petitioner, Interglobe Aviation Ltd, challenged the levy, arguing that such taxation resulted in double taxation, as duties were already paid under the import of services at the time of sending the parts overseas. The court held that the imposition of IGST on re-imported goods was unconstitutional and ultra vires the Integrated Goods and Services Tax Act, 2017.
The court delved into the legislative framework governing the levy of taxes under the Central Tax Acts and the IGST Act. It ruled that an integrated tax on the import of services could only be imposed under Section 5(1) of the IGST Act. The judgment emphasized that a service, once classified under the IGST Act, could not be recharacterized for additional levies under the Customs Tariff Act (CTA). The court clarified that the provisions of Section 3(7) of the CTA, as amended, are linked to the tax collection machinery under the IGST Act, rather than constituting an independent taxing provision.
Relying on earlier precedents such as the Supreme Court’s decision in Hyderabad Industries Ltd, the court rejected the respondents’ reliance on the interplay between Basic Customs Duty (BCD) and additional duties under the CTA. It held that amendments introduced via Notification No. 36/2021, which sought to impose additional levies, extended beyond the intended scope of taxation and were not merely clarificatory. The court declared these amendments, along with Circular No. 16/2021 issued by the Central Board of Indirect Taxes and Customs (CBIC), unconstitutional.
In its disposition, the court quashed the impugned notifications and assessment orders passed by the Commissioner of Customs. It also declared the additional levy and the explanation added to the notification as invalid, granting the petitioner consequential reliefs. This judgment reinforces the legislative boundaries for tax impositions and upholds constitutional principles in the context of indirect taxation.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
