Statutory development fee levy by airport lessees requires clear legal authority and valid rate fixation under the governing law.

Airport lessees had no authority to levy and collect development fees under Section 22A on the basis of Central Government approval letters, because the power to impose this statutory levy did not pass with the lease and the relevant airport development functions remained statutory functions of the Airports Authority. The levy also failed for want of lawful rate fixation: before the 2008 amendment, the fee had to be prescribed under the statute, and after the amendment for major airports it had to be determined by the Regulatory Authority; in both situations, mere approval letters were insufficient. The lessees were required to account to the Airports Authority for collections and ensure use only for the permitted statutory purpose.

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Issues: (i) Whether the lessees of airports could levy and collect development fees under Section 22A of the Airports Authority of India Act, 1994 on the strength of the Central Government's approval letters. (ii) Whether, before the 2008 amendment and thereafter, levy of development fees required the rate to be prescribed or determined in the manner contemplated by the statute and whether the absence of such prescription or determination invalidated the levy. (iii) Whether the lessees were required to account for the development fees already collected and how the earlier collections were to be treated.

Issue (i): Whether the lessees of airports could levy and collect development fees under Section 22A of the Airports Authority of India Act, 1994 on the strength of the Central Government's approval letters.

Analysis: Section 12A permits lease of airport premises for carrying out some functions of the Airports Authority, and sub-section (4) gives the lessee the powers necessary for performance of the functions actually assigned. Development fee under Section 22A is not a mere contractual charge for facilities under Section 22, but a statutory levy for the specific purposes stated in clauses (a), (b) and (c) of Section 22A. The function of establishing a new airport or assisting in a private airport is an exclusive statutory function of the Airports Authority and cannot be assigned to a lessee under Section 12A; therefore the power to levy development fee for those purposes does not pass to the lessee.

Conclusion: The lessees had no authority to levy and collect development fees under Section 22A on the basis of the Central Government's approval letters.

Issue (ii): Whether, before the 2008 amendment and thereafter, levy of development fees required the rate to be prescribed or determined in the manner contemplated by the statute and whether the absence of such prescription or determination invalidated the levy.

Analysis: Before amendment, Section 22A expressly required the fee to be levied at the rate as may be prescribed; without rules prescribing the rate, the levy could not operate. The levy is in the nature of a cess or tax, so Article 265 applies and the exaction must rest on clear legal authority. After the 2008 amendment, the rate for major airports is to be determined by the Airports Economic Regulatory Authority under Section 13(1)(b) of the 2008 Act, and not by the Central Government. Until such determination, the levy at major airports could not validly continue on the basis of the Central Government's letters.

Conclusion: The levy was invalid without prescribed rates before the amendment and without determination by the Regulatory Authority after the amendment for major airports.

Issue (iii): Whether the lessees were required to account for the development fees already collected and how the earlier collections were to be treated.

Analysis: The Court declined to direct individual refunds because the passengers could not be identified and no refund prayer had been made, but considered it necessary to ensure that the collections were confined to the statutory purpose. It therefore required the lessees to account to the Airports Authority for the fees collected and for their use in the permissible purpose under clause (a) of Section 22A.

Conclusion: The lessees were directed to account to the Airports Authority for the development fees collected and to ensure utilisation for the statutory purpose.

Final Conclusion: The impugned High Court judgment was set aside, the levy of development fees by the lessees was held unauthorised in law, and the appeals were allowed with consequential directions regulating past and future collections.

Ratio Decidendi: A statutory levy described as a fee cannot be imposed by a lessee unless the statute clearly authorises such levy and prescribes or provides the mechanism for fixation of the rate, and a power to levy for one statutory purpose cannot be expanded by lease to cover exclusive functions of the authority.

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