InterGlobe Aviation Ltd., the parent company of IndiGo received a GST demand notice of about INR 118 crore from the Central GST authorities in Kochi. The notice was issued on December 1, and includes both the tax demand and a penalty.

According to the company, the GST department has denied the input tax credit (ITC) that IndiGo had claimed for the financial years 2018–19 to 2021–22. InterGlobe said it believes the order is incorrect and added that its tax advisors are confident of winning the case. The airline plans to challenge the notice before the appropriate authority.

The company also said that the notice will not have any major impact on its finances or day-to-day operations.

IndiGo’s shares fell nearly 2% in Tuesday’s trading on the National Stock Exchange, dropping to INR 5,680, after news of the tax order and a bomb scare on one of its flights.

This GST notice comes just two weeks after the DGCA fined IndiGo INR 20 lakh. The penalty was for not properly following a prescribed flight procedure at Udaipur Airport. The DGCA said the airline used a procedure created by itself instead of the one officially issued by the Airports Authority of India.

These regulatory issues come at a time when IndiGo is preparing to inject $820 million into its subsidiary, InterGlobe Aviation Financial Services IFSC Pvt Ltd. The subsidiary will use the funds to buy and own aircraft, which is part of IndiGo’s long-term expansion strategy.