InterGlobe Aviation Limited, the parent entity of India’s dominant low-cost carrier IndiGo, disclosed on Tuesday that it has been served a combined demand and penalty order amounting to ₹117.52 crore by the Joint Commissioner of Central Tax and Central Excise under the CGST Kochi Commissionerate in Kerala. The substantial financial blow arises from the tax authority’s decision to disallow input tax credit (ITC) claimed by the airline across a four-year period from 2018-19 to 2021-22, covering multiple categories of expenditure that the department now deems ineligible.

The order follows a detailed GST audit and adjudication process, wherein the authorities not only rejected the entire quantum of disputed ITC but also levied an equivalent penalty, effectively doubling the liability. Such equal-penalty provisions are among the strictest under the GST law and are typically invoked when authorities believe there was deliberate misinterpretation or wrongful availment of credit, a charge IndiGo has categorically rejected as baseless.

In its immediate regulatory filing to the stock exchanges, IndiGo described the adjudication order as “erroneous” and asserted that it has a strong meritorious defence backed by independent opinions from leading tax experts and legal counsel. The airline underlined its consistent adherence to GST regulations and expressed full confidence that the demand will be set aside at the appellate stage, with the company already preparing to file an appeal before the appropriate statutory forum in the coming days.

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IndiGo further reassured shareholders and the market that the matter will have no material impact on its financial position, operational performance, or day-to-day activities, given the company’s robust cash reserves and profitability. Management views the penalty as a routine, albeit large, tax litigation that is increasingly common among major corporates operating under India’s complex GST regime.

Market reaction was measured but negative, with InterGlobe Aviation shares closing 1.60 percent lower at ₹5,697.70 on the BSE amid broader profit-booking. Investors appeared to treat the development as a short-term overhang rather than a fundamental risk, especially as the airline has a track record of successfully contesting similar tax disputes in the past and has repeatedly emphasised its commitment to compliance and transparency.

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