TaxTMI 
TaxTMI 
2011 (4) TMI 1275
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...., New Delhi and the Chhatrapati Shivaji International Airport, Mumbai. Relevant Facts: 4. The Airports Authority of India Act, 1994 (for short 'the 1994 Act') came into force on 01.04.1995 and under Section 3 of the 1994 Act, the Central Government constituted the Airports Authority of India (for short 'the Airports Authority'). Section 12 of the 1994 Act enumerates the various functions of the Airports Authority. By the Airports Authority of India (Amendment) Act, 2003 (for short 'the Amendment Act of 2003'), Sections 12A and 22A were inserted in the 1994 Act with effect from 01.07.2004. The newly inserted Section 12A provides that the Airports Authority may make a lease of the premises of an airport to carry out some of its functions under Section 12 as the Airports Authority may deem fit. The newly inserted Section 22A of the 1994 Act provides that with the approval of the Central Government, the Airports Authority may levy on, and collect from, the embarking passengers at an airport, the development fees at the rate as may be prescribed. On 04.04.2006, the Airports Authority leased out the Indira Gandhi International Airport, New Delhi (for short 'the Delhi Airport') to t....
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....er the 2008 Act as provided in Section 22A of the Act before and after its amendment by the 2008 Act, the levy and collection of development fees are ultra vires the 1994 Act. The Division Bench of the High Court, after hearing, held that there was no illegality attached to the imposition of development fees by the two lessees with the prior approval of the Central Government and dismissed the writ petitions by the impugned judgment and order. Conclusions of the High Court: 5. In the impugned judgment and order, the High Court held that under sub-section (1) of Section 12A of the 1994 Act, the Airports Authority is empowered to lease an airport for the performance of its functions under Section 12 and such a lease is a statutory lease which enables the lessee to perform the functions of the Airports Authority enumerated in Section 12. The High Court further held that sub-section (4) of Section 12A provides that the lessee who has been assigned some functions of the Airports Authority under sub-section (1) shall have "all" the powers of the Airports Authority necessary for the performance of such functions in terms of the lease and use of the word "all" indicates that the less....
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.... the 2008 Act. The Regulatory Authority has been established by notification dated 12.05.2009 and unless the rate of development fees is determined by the Regulatory Authority under Clause (b) of sub-section (1) of Section 13 of the 2008 Act, the same cannot be levied and collected from the embarking passengers at the two major airports. The determination of the rate of development fees to be levied at the two major airports under Clause (b) of sub-section (1) of Section 13 of the 2008 Act by the Regulatory Authority of India is still pending and the impugned levy of development fees by DIAL and MIAL are, therefore, ultra vires. (ii) The purposes for which the development fees are to be levied and collected are indicated in clauses (a), (b) and (c) of Section 22A of the 1994 Act and these are: (a) funding or financing the costs of upgradation, expansion or development of the airports at which the fees is collected, or (b) establishment or development of a new airport in lieu of the existing airport, or (c) investment in the equity in respect of shares to be subscribed by the Airports Authority in companies engaged in establishing, owning, develop....
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....ust have power to determine, demand, collect and retain appropriate charges from the users of the airports. (ii) Section 22A of the 1994 Act permits the Airports Authority after previous approval of the Central Government to levy on and collect from embarking passengers at an airport development fees. Accordingly, after the lease of the two airports by the Airports Authority to DIAL and MIAL, the Central Government has conveyed its approval in the two letters dated 09.02.2009 and 27.02.2009 to DIAL and MIAL for levy of development fees by DIAL and MIAL respectively from the two airports. Such approval conveyed by the Central Government is entirely in accordance with Section 12A of the 1994 Act. In view of sub-section (4) of Section 12A of the 1994 Act providing that a lessee who has been assigned any of the functions of the Airports Authority would have all the powers of the Airports Authority necessary for the performance of such function in terms of the lease, the power of the Airports Authority to levy the development fees has also been rightly assigned to DIAL and MIAL. A reading of the two approval letters would show that various conditions and safeguards have been in....
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....nt fees by virtue of the approvals granted by the Central Government which are saved by Section 6 (c) of the General Clauses Act, 1897 despite the amendment of Section 22A by the 2008 Act. The decisions of this Court in Jayantilal Amrathlal v. Union of India [(1972) 4 SCC 174], S.L. Srinivasa Jute Twine Mills (P) Ltd. v. Union of India & Anr. [(2006) 2 SCC 740] and M/s. Gurcharan Singh Baldev Singh v. Yashwant Singh & Ors. [(1992) 1 SCC 428] support this contention. (vi) Section 2 (n) of the 2008 Act defines "service provider" as any person who provides aeronautical services "and is eligible to levy and charge user development fees from the embarking passengers at any airport and includes the authority which manages the airport". This provision expressly indicates that under the 2008 Act also the entity managing the airport is eligible to levy and collect the development fees. The 1994 Act and the 2008 Act provide a statutory framework for the modernization and improvement of the aviation infrastructure of the country and should be interpreted in a harmonious manner so that they complement each other rather than conflict with each other. The Regulatory Authority constitute....
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....of India v. S. Narayana Iyer [(1970) 1 MLJ 19] and Union of India & Ors. v. M otion Picture Association & Ors . [(1999) 6 SCC 150]. As the facilities are in the nature of monopolies, the statute imposes regulations for the charges to prevent an abuse of monopolistic position and Sections 22 and 22A of the 1994 Act reflect such statutory curtailments of the rights of the owners of the facilities to recover sums from airlines and passengers. Hence, the right to recover charges is not based on Sections 22 and 22A but flows from the ownership of the facilities. What is determined, therefore, is the charges that would be contractually recovered from the users of the facilities as was held in M/s Aminchand Pyarelal & Ors. (supra). (ii) Section 22 of the 1994 Act identified the heads on which charges could be recovered. Section 22A, therefore, merely adds three more heads for which funds could be raised and this is akin to adding components of a tariff. Section 22A does not change the quality and character of the recovery of charges by the owners of the facilities from the users thereof. Section 22A does not also change the nature and character of what is recovered by an airport ....
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....n Orissa State (Prevention & Control of Pollution) Board v. Orient Paperdd Mills & Anr. (supra), T. Cajee v. U. Jormanik Siem & Anr. (AIR 1961 SC 276), The Madras and Southern Maharatta Railway Company Limited v. The Municipal Council Bezwada [(1941) 2 MLJ 189] as approved by the Privy Council in its decision reported in AIR 1944 PC 71, Jantia Hill Truck Owners Association, etc. v. Shailang Area Coal Dealer and Truck Owner Association & Ors. [(2009) 8 SCC 492], Surinder Singh v. Central Government & Ors. (supra), Meghalaya State Electricity Board & Anr. v. Jagadindra Arjun [(2001) 6 SCC 446] and U.P. State Electricity Board, Lucknow v. City Board, Mussorie & Ors. (supra). Since the power to collect the development fee is already available to the Airports Authority or its lessees as part of its power to collect charges for the facilities, absence of a rule does not negate the power. The rule under Section 22A was to be made not for purposes of conferring the power but to regulate the rate of development fees and manner of utilization of development fee as a check on such power. (vi) After the 2008 Act and after the notification dated 31.08.2009 bringing the provisions of 20....
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....ed out the airport premises to the lessee to manage the airport. Section 38 of the 1994 Act empowers the Central Government to temporarily divest the Airports Authority of the management of the airport and Section 39 of the 1994 Act empowers the Central Government to supersede the Airports Authority. The lessee, therefore, is not the owner of the airport and is consequently not empowered to charge development fess for the development of the airport. Only a limited right has been conferred on the private lessee under Section 12A of the 1994 Act to undertake some of the functions of the Airports Authority enumerated in Clause 2.1.1 of the OMDA read with Schedule 5 and Schedule 6 which enumerate the aeronautical services and nonaeronautical services respectively. (ii) The levy under Section 22A of the 1994 Act is for the specific purposes mentioned in Clauses (a), (b) or (c) thereof and though termed as fees, it is really in the nature of a cess and therefore there need not be any direct co-relation between the levy of fees and the services rendered as has been held by the High Court in the impugned judgment. In Vijayalashmi Rice Mills & Ors. v. Commercial Tax Officers, Palak....
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....& Anr. [1962 (2) SCR 659], a Constitution Bench of this Court has held that since Section 11 of the Bombay Agricultural Produce Markets Act, 1939 provides that rules will prescribe the maxima and the fees fixed must be within the maxima, till such maxima are fixed by the rules, it would not be possible for the Market Committee to levy fees. Similarly, in Dhrangadhra Chemical Works Ltd. v. State of Gujarat & Ors. [(1973) 2 SCC 345], this Court has held that the framing of rules was a mandatory requirement enjoined by Section 60(a)(ii) of the Bombay Municipalities Act, 1901 before imposing a tax by a resolution passed at a general meeting. (iv) The two letters dated 09.02.2009 and 27.02.2009 of the Government of India, Ministry of Civil Aviation, to DIAL and MIAL respectively can convey only the approvals of the Central Government under Section 22A of the 1994 Act for levy of development fees by DIAL and MIAL respectively but cannot authorize DIAL and MIAL to levy and collect development fees under Section 22A of the 1994 Act because under this provision the Airports Authority only has the power to levy and collect development fees and DIAL and MIAL have no such authority. T....
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....ocations as may be considered necessary for safe navigation and operation of aircrafts; (c) provide air safety services and search and rescue, facilities in co-ordination with other agencies; (d) establish schools or institutions or centers for the training of its officers and employees in regard to any matter connected with the purposes of this Act; (e) construct residential buildings for its employees; (f) establish and maintain hotels, restaurants and restrooms at or near the airports; (g) establish warehouses and cargo complexes at the airports for the storage or processing of goods; (h) arrange for postal, money exchange, insurance and telephone facilities for the use of passengers and other persons at the airports and civil enclaves; (i) make appropriate arrangements for watch and ward at the airports and civil enclaves; (j) regulate and control the plying of vehicles, and the entry and exit of passengers and visitors, in the airports and civil enclaves with due regard to the security and protocol functions of the Government of India; (k) develop and provide consultancy, construction or managemen....
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....r providing air traffic services, ground safety services, aeronautical communications and navigational aids and meteorological services at any airports and at any aeronautical communication station; (c) for the amenities given to the passengers and visitors at any airport, civil enclave, heliport or airstrip; (d) for the use and employment by persons of facilities and other services provided by the Authority at any airport, civil enclave heliport or airstrip; (ii) with due regard to the instructions that the Central Government may give to the Authority, from time to time, charge fees or rent from persons who are given by the Authority any facility for carrying on any trade or business at any airport, heliport or airstrip. Inserted by the Amendment Act of 2003 12A. Lease by the authority.-(1) Notwithstanding anything contained in this Act, the Authority may, in the public interest or in the interest of better management of airports, make a lease of the premises of an airport (including buildings and structures thereon and appertaining thereto) to carry out some of its functions under section 12 as the Authority may deem fit: Prov....
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....Economic Regulatory Authority of India Act, 2008 the development fees at the rate as may be determined under clause (b) of sub-section (1) of Section 13 of the Airports Economic Regulatory Authority of India Act, 2008, and such fees shall be credited to the Authority and shall be regulated and utilized in the prescribed manner, for the purposes of-- (a) funding or financing the costs of upgradation, expansion or development of the airport at which the fees is collected; or (b) establishment or development of a new airport in lieu of the airport referred to in clause (a); or (c) investment in the equity in respect of shares to be subscribed by the Authority in companies engaged in establishing, owning, developing, operating or maintaining a private airport in lieu of the airport referred to in clause (a) or advancement of loans to such companies or other persons engaged in such activities. Our conclusions with reasons: 11. The conclusion of the High Court in the impugned judgment that the lessee of the airport has the power of the Airports Authority under Section 22A to levy and collect development fees from the embarking passengers by virtue of sub-....
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....le the Airports Authority to perform its statutory function of establishing a new airport or to assist in the establishment of private airports, the legislature has thought it fit to empower the Airports Authority to levy and collect development fees as will be clear from clauses (b) and (c) of Section 22A of the 1994 Act. Such development fees levied and collected under Section 22A can also be utilized for funding or financing the costs of up-gradation, expansion and development of an existing airport at which the fees is collected as provided in clause (a) of Section 22A of the Act and in case the lease of the premises of an existing airport (including buildings and structures thereon and appertaining thereto) has been made to a lessee under Section 12A of the Act, the Airports Authority may meet the costs of up-gradation, expansion and development of such leased out airport to a lessee, but this can be done only if the rules provide for such payment to the lessee of an airport because Section 22A says that the development fees are to be regulated and utilized in the manner prescribed by the Rules. Since the lessee of an airport cannot be assigned the function of the Airports Aut....
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....thereto) in favour of a lessee to carry out some of its functions under Section 12, the lessee, who has been assigned such functions, will have the powers of the Airports Authority under Section 22 of the Act to collect charges, fees or rent from the third parties for the different facilities and services provided to them in terms of the lease agreement. The legal basis of such charges, fees or rent enumerated in Section 22 of the 2008 Act is the contract between the Airports Authority or the lessee to whom the airport has been leased out and the third party, such as the airlines, passengers, visitors and traders doing business at the airport. But there can be no such contractual relationship between the passengers embarking at an airport and the Airports Authority with regard to the upgradation, expansion or development of the airport which is to be funded or financed by development fees as provided in clause (a) of Section 22A. Those passengers who embark at the airport after the airport is upgraded, expanded or developed will only avail the facilities and services of the upgraded, expanded and developed airport. Similarly, there can be no contractual relationship between the Air....
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.... Jayantikumar Pasawalla & Ors. (supra), it has been consistently held by this Court that whenever there is compulsory exaction of money, there should be specific provision for the same and there is no room for intendment and nothing is to be read or nothing is to be implied and one should look fairly to the language used. Looking strictly at the plain language of Section 22A of 1994 Act before its amendment by the 2008 Act, the development fees were to be levied on and collected from the embarking passengers "at the rate as may be prescribed". Since the rules have not prescribed the rate at which the development fees could be levied and collected from the embarking passengers, levy and collection of development fees from the embarking passengers was without the authority of law. For this conclusion, we are supported by the Constitution Bench judgment of this Court in Mohammad Hussain Gulam Mohammad & Anr. v. The State of Bombay & Anr. (supra). In that case, the Court found that Section 11 of the Bombay Agricultural Produce Markets Act, 1939 provided that the market committee may levy market fees subject to the maxima as prescribed and the Court held that unless the State Government....
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.... and, therefore, the framing of regulations under Section 70(h) of the Act cannot be a condition precedent for fixing the Grid Tariff. The language of Section 22A of the 1994 Act is different. It clearly states that the Airports Authority may levy on and collect from the embarking passengers at the airport the development fees at the rate as may be prescribed. Hence, unless the rate is prescribed by the rules, the Airports Authority cannot collect the development fees. 17. The High Court has also relied on the decision of this Court in Mysore Road Transport Corporation v. Gopinath Gundachar Char (supra). In that case, the Court was called upon to interpret the provisions of the Road Transport Corporations Act, 1950. Section 45(1) of that Act provided that a Corporation may, with the previous sanction of the State Government, make regulations, not inconsistent with the Act and the rules made thereunder, for the administration of the affairs of the Corporation and in particular, providing for the conditions of appointment and service. The Court has held that in the absence of regulations framed under Section 45 laying down the conditions of service, the Corporation can still appoi....
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.... fix the rate at which the development fees is to be levied and collected from the embarking passengers. Hence, the levy and collection of development fees by DIAL and MIAL at the rates fixed by the Central Government in the two letters dated 09.02.2009 and 27.02.2009 are ultra vires the 1994 Act and the two letters being ultra vires the 1994 Act are not saved by Section 6 of the General Clauses Act, 1897. 20. After the amendment of Section 22A by the 2008 Act with effect from 01.01.2009, the rate of development fees to be levied and collected at the major airports such as Delhi and Mumbai is to be determined by the Regulatory Authority under clause (b) of sub-section (1) of Section 13 of the 2008 Act and not by the Central Government. The Regulatory Authority constituted under the 2008 Act has already issued a public notice dated 23.04.2010 permitting DIAL to continue to levy the development fees at the rate of Rs. 200/- per departing domestic passenger and at the rate of Rs. 1,300/- per departing international passenger with effect from 01.03.2009 on an ad hoc basis pending final determination under Section 13 of the 2008 Act. This public notice dated 23.04.2010 has been issue....
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....three writ petitions. However, it is necessary to ensure that the development fees levied and collected are utilized only for the specific purposes mentioned in Section 22A of the 1994 Act. In our considered opinion, interests of justice would be met if DIAL and MIAL are directed to account to the Airport Authority that the development fees so far levied and collected by them have been utilized for the purposes mentioned in clause (a) of Section 22A of the 1994 Act. Reliefs: 23. In view of the foregoing, we allow these appeals as follows: (i) We hold that development fees could not be levied and collected by the lessees of the two major airports, namely, DIAL and MIAL, on the authority of the two letters dated 09.02.2009 and 27.02.2009 of the Central Government from the embarking passengers under the provisions of Section 22A of the 1994 Act. (ii) We declare that with effect from 01.01.2009, no development fee could be levied or collected from the embarking passengers at major airports under Section 22A of the 1994 Act, unless the Airports Economic Regulatory Authority determines the rates of such development fee. (iii) We direct that MIAL will henc....