The Indian Air Force has appealed the Directorate of Revenue Intelligence (DRI) to see in a new light the imposition of huge integrated goods and services tax (IGST) on parts of aircraft which attract no tax under the harmonised system nomenclature (HSN) code pursued by GST for putting the goods under five tax rate slabs – nil, 5%, 12%, 18% and 28%.
More than INR 100 crore of IGST has been levied on different imported goods which have been showcased as “parts of aircraft” by the Indian Air Force in its books of accounts. In the same matter, the Indian Air Force has appealed Directorate of Revenue Intelligence (DRI) to give a second thought to the decision.
IAF’s put forth an argument before the federal revenue intelligence agency that the items of the aircraft — electrical and mechanical parts, antennas and electronic spares, falls under no or 5% GST rate slab as these items are enlisted under customs tariff heading 8803.
But according to the DRI, these imported appurtenances are not “parts of aircraft” which are exempt from GST.
One person in this regard said, “The IGST levied on these items is from the period of the inception of GST. The matter is being probed since August last year and, last month, the IAF made a representation before the DRI, Mumbai, contesting the duty citing that these were parts of aircraft and are well within the common HSN code which guides the GST slabs and that these goods attract GST under chapter 8803 that allows nil or 5% GST,”.
According to this person, the IAF is looking forward to escalating the issue at the ministerial standard and that the finance is required to purchase other important types of equipment.
Further the person added,”Unlike commercial planes where these items are fitted in the aircraft for commercial purposes, IAF aircraft is mainly used for defence purposes and there is a view in the forces that the matter should be taken at the highest level so that IGST on accessories imported by the IAF are exempted,”.
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According to DRI, IAF is no different from other government agencies who are liable to pay IGST on imports. The IAF could initially pay the tax, followed by claiming it back from the government.
DRI official said, “The IAF has not been singled out, the DRI found duty evasion of over INR 300 crores by various private airline and aerospace firms. Most of these airlines have paid up IGST”. “The duty paid helps the government in better accountability of its expenditure. The said duty could be reclaimed by the IAF,” the official added.
