2017 (2) TMI 470

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....iging it to collect tax on every inland journey from the passenger @ 10% of the fare. The carrier has to credit the amount to the Central Government failing which an interest on the amount of tax not paid for the delayed period is payable at the rate not below 20% and not exceeding 30%. Admittedly, the petitioner/carrier under the Act, did not pay the amount although it had collected it from its passengers. Therefore, the minimum rate of 20% was imposed on the unpaid amount. In default of payment of the demanded amount the aircraft which was then leased to the petitioner from M/s Air U.K. Leasing Limited (Lessor) had been distrained. It was later released and de-registered upon the lessor depositing a sum of Rs. 12.5 crores under the order of this Court in WP(C) 110/1997 which had been filed by the Lessor. Subsequently, by Writ Petition (C) No. 1908/1997, the Lessor sought refund of the said amounts of Rs. 12.5 crores contending that it was not liable to pay the said amount towards the IATT dues. That writ petition was disposed off on 18.01.1999 in view of the order passed by the Assistant Commissioner of Customs on 13.01.1999 holding that the aforesaid amount of Rs. 8,65,06,850/- ....

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.... dimension which wounds unrealistic when seen in the light of persisting practice. I, therefore, hold that to meet the ends of justice, a modification in the impugned order to reduce the amount of penalty is necessary. I accordingly reduce the amount of penalty from Rs. 25 crore to Rs. 10 crore (Rupees Ten Crore only) and modify the impugned order to this extent." 4. The Commissioner (Appeals) was also of the view that the amount of Rs. 12.5 crore lying deposited against the distrained aircraft in terms of Section 46A of the Act could not be deemed to have been recovered against the amounts payable by the carrier because it was the carrier's specific liability which had to be discharged by it. The Commissioner (Appeals) reasoned as under: "Thus, the facts, placed before me, clearly evince that the amount of Rs. 12.5 crore is lying deposited and represents the distrained aircraft in term of Section 46A ibid. The appellants have however, contended that the amount stands appropriated and in support of this, have referred to the department's letter dated 15.4.97. Citing the contents of that letter, the appellants have themselves mentioned, in their write-up submitted on 11.8.2000....

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....petence (as revealed from their letter dt 21.12.98 (vis-a-vis Lufthansa) in reply to the 6 SCNs) and claim the deposits made by another as their own payments. The lessor are not a party to the instant proceedings. What they have paid was in accordance to the Court orders and cannot be appropriated towards the dues of the respondents, even though on the date of deposit the sums more or less equalled the dues. The deposits made by the lessor are different from the dues payable by the respondents. Had it not been so, the lessor, namely, M/s Air U.K. Leasing Ltd would not have sought orders from the Court for return of those sums. Therefore the respondents plea enumerated vide para 10.3 to 10.6 supra are not sustainable and are rejected." 6. The learned counsel for the petitioner has reiterated arguments similar to what was advanced by it all along in the authorities below. In addition, the learned counsel for the petitioner has stressed that M/s. Air U.K. Leasing Ltd deposited the amount of Rs. 12.5 crores although under the directions of this Court, in two transactions, i.e. Rs. 8 crores was paid by draft in the name of the Commissioner of Customs, Air Cargo Unit, New Delhi and Rs. ....

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....ion (3) or sub-section (4). 46-A(4) - The authority may distrain or arrest any aircraft and any other property belonging to, or under the control of, the carrier of other person, as the case may be, and detain the same until the tax, interest or penalty so determined is paid; and in case any part of the tax, interest or penalty or of the cost of the distress or arrest or of the keeping of the aircraft or other property distrained or arrested, remains unpaid for the space of thirty days next after any such distress or arrest, may cause the said aircraft or other property to be sold and with the proceeds of such sale may satisfy the tax, interest or penalty and the costs including the cost of sale remaining unpaid, and shall render the surplus, if any, to the carrier or other person." 9. Under the statutory scheme, therefore, the aircraft which was in possession of the carrier was first distrained and then released to the Lessor upon the deposit of an amount near equivalent of the dues then outstanding. Therefore, the deposit would represent only the aircraft and not such amounts as were to be recovered from the carrier. The Lessor was, obviously interested in release of the aircra....