Question

One of our aviation clients dealing in passenger transportation (Airlines) is registered in Delhi and has its Head office outside India. All the planes used in India are owned by company abroad. They own no airplanes/assets in their own Delhi books. They import aircraft wheels in case the wheels of the planes need to be changed because of wear and tear, which rarely happens and are therefore sent back to the HO in a few years. The client pays considerable amounts of IGST on such imports. The aircrafts do not appear as Assets in their Books of Accounts as they are owned by HO Abroad.
1) Is the Delhi Office eligible to claim IGST paid on import
2) If not , how can Delhi Office save their Payment of IGST 3) What should be the treatment when returning these wheels to the HO, outside India?

Answer

1. Delhi office can claim ITC of IGST provided all other conditions of section 16 of CGST Act are fulfilled.

2. Since the goods are imported and used for domestic as well as international flight therefore tax is to be paid on import of goods.

3. In case you are not consuming the imported goods (tyres) then you have the option to re-export the said goods with in the period of 2 years from the date of import as provided under section 74 of Customs Act, 1962. For resorting to this provision you have to obtained permission from PO of custom. On re-export of goods you are entitled for drawback of customs duty involved. However there is no provision to claim refund of IGST paid at the time of import of tyre. (Reply dt.20/07/2018)